INCOME TAXES

Effective Tax Rate

Our effective income tax rate for continuing operations was 20.2%, which represents a tax benefit on a pre-tax loss, compared to a benefit of 38.4% on pre-tax income for the 13-week periods ended January 26, 2019 and January 27, 2018, respectively, and 20.0% and 8.9% for the 26-week periods ended January 26, 2019 and January 27, 2018, respectively. The increase in the effective income tax rate was primarily driven by the one-time tax benefit of $21.9 million recorded in fiscal 2018 for the impact of the re-measurement of U.S. net deferred tax liabilities due to tax reform.

The total (benefit) provision for income taxes included in the consolidated statements of income consisted of the following:



	13-Week Period Ended						26-Week Period Ended
(in thousands)	January 26, 2019			January 27, 2018			January 26, 2019			January 27, 2018
Continuing operations	$	(91,809	)	$	(14,001	)	$	(96,064	)	$	7,888
Discontinued operations	5,239			—			5,987			—
Total	$	(86,570	)	$	(14,001	)	$	(90,077	)	$	7,888

Effects of the Tax Cuts and Jobs Act

The Tax Cuts and Jobs Act (“TCJA”) was enacted on December 22, 2017. Given the significance of the legislation, the SEC staff issued SAB 118, which allowed registrants to record provisional or estimated amounts concerning TCJA impacts during a one year “measurement period” similar to that used when accounting for business combinations. The measurement period was deemed to end when the registrant has obtained, prepared and analyzed the information necessary to finalize its accounting.

As of the current quarterly period, the Company has closed the measurement period relating to the effects of TCJA. The final amounts the Company has reported may change further only in the event of return to provision adjustments.

Uncertain Tax Positions

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:



	26-Week Period Ended
(in thousands)	January 26, 2019
Unrecognized tax benefits at beginning of period	$	1,104
Unrecognized tax benefits assumed in a business combination	49,566
Decreases in unrecognized tax benefits due to statute expiration	(9,789		)
Unrecognized tax benefits at end of period	$	40,881

In addition, the Company has $14 million paid on deposit to various governmental agencies to cover the above liability. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. For the 13-week period ended January 26, 2019, total gross interest and penalties was a benefit of $1.2 million due to the expiration of the statute of limitations on various reserves. For the 26-week period ended January 26, 2019, total gross interest and penalties was a benefit of $1.1 million.

The Company is currently under examination in several taxing jurisdictions and remains subject to examination until the statute of limitations expires for the respective taxing jurisdiction or an agreement is reached between the taxing jurisdiction and the Company. As of January 26, 2019, the Company is no longer subject to federal income tax examinations for fiscal years before 2015 and in most states is no longer subject to state income tax examinations for fiscal years before 2008 and 2014 for Supervalu and United Natural Foods, Inc., respectively.

Based on the possibility of the closing of pending audits and appeals, or expiration of the statute of limitations, it is reasonably possible that the amount of unrecognized tax benefits will decrease by up to $1.2 million during the next 12 months.

Other

Under ASU 2016-09, the Company accounts for excess tax benefits or tax deficiencies related to share-based payments in its provision for income taxes as opposed to additional paid-in capital. The Company recognized $1.3 million of income tax expense related to excess tax deficiencies for share-based payments for the 26-week period ended January 26, 2019 and $0.9 million of income tax expense related to tax deficiencies for share-based payments for the 26-week period ended January 27, 2018.