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Income Taxes | 12 Months Ended
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Dec. 30, 2017
Income Taxes |
Income Taxes | 13. Income Taxes Effects of the Tax Cuts and Jobs Act On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was signed into U.S. law. The Tax Act significantly changes the Internal Revenue Code of 1986, as amended. The Tax Act, among other things, includes changes to the U.S. corporate tax rate, expands limitations on the deductibility of meals and entertainment, eliminates the exception to the section 162(m) limitation on the deductibility of the compensation paid to certain executive officers for "qualified performance-based compensation," allows for the expensing of capital expenditures, the migration from a "worldwide" system of taxation to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. ASC Topic 740, "Accounting for Income Taxes," requires companies to recognize the effect of tax law changes in the period of enactment even though the effective date for most provisions is for tax years beginning after December 31, 2017, or in the case of certain other provisions of the law, January 1, 2018. Given the significance of the legislation, the U.S. Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118 ("SAB 118"), which allows registrants to record provisional amounts during a one year "measurement period" similar to that used when accounting for business combinations. However, the measurement period is deemed to have ended earlier when the registrant has obtained, prepared, and analyzed the information necessary to finalize its accounting. During the measurement period, impacts of the law are expected to be recorded at the time a reasonable estimate for all or a portion of the effects can be made, and provisional amounts can be recognized and adjusted as information becomes available, prepared, or analyzed. SAB 118 summarizes a three-step process to be applied at each reporting period to account for and disclose: (1) the effects of the change in tax law for which accounting is complete; (2) provisional amounts (or adjustments to provisional amounts) for the effects of the change in tax law where accounting is not complete, but a reasonable estimate has been determined; and (3) current or deferred tax amounts reflected in accordance with law prior to the enactment of the change in tax law because the accounting of the effects of the change in tax law are not complete and a reasonable estimate has not been determined, together with qualitative disclosure of the effects of the changes in tax law for which the accounting is not compete, the reason why the accounting is not complete, and the additional information that is needed to be obtained, prepared or analyzed in order to complete the accounting. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next twelve months, CRA considers the accounting to be incomplete due to the forthcoming guidance and its ongoing analysis of final year-end data and tax positions. Adjustments to these preliminary amounts identified during the measurement period, as defined, will be included as an adjustment to tax expense from continuing operations in the period the amounts are determined. CRA believes it has made a good faith effort to complete the accounting under ASC 740 with respect to the Tax Act. SAB 118 provides that the measurement period is complete when a company's accounting is complete and in no circumstances should the measurement period extend beyond one year from the enactment date of the applicable change in tax law. In connection with the Tax Act, CRA has recorded a provisional amount attributable to the remeasurement of deferred taxes assets and liabilities from a 35 percent tax rate to the new 21 percent tax rate. The provisional amount recorded was an increase in tax expense of $3.6 million. The Tax Act also enhanced and extended the option to claim accelerated depreciation deductions at a rate of 100% on qualified property placed in service after September 27, 2017, and before 2023. As such, CRA has claimed accelerated depreciation in fiscal 2017 of $2.9 million on qualified property. The Tax Act also includes a one-time mandatory repatriation transition tax on the net accumulated earnings and profits of a U.S. taxpayer's foreign subsidiaries. Based on its calculations and estimates to date, CRA does not expect to incur any transition tax liability as CRA believes it is in an accumulated deficit position with respect to its foreign subsidiaries. As such, CRA has not recorded any income tax expense relating to this transition tax as of December 30, 2017. CRA is in the process of assessing other significant provisions that are not yet effective but may impact income taxes in future years. As there is some uncertainty around the grandfathering provisions related to performance-based executive compensation, CRA has estimated a provisional amount for deferred tax assets related to performance-based executive compensation. In regards to the new base erosion anti-abuse tax ("BEAT"), CRA does not currently meet certain revenue thresholds, and is therefore not subject to the new minimum tax. CRA may be subject to the tax on the Global Intangible Low-Taxed Income (GILTI) in future years but has not completed its analysis of the applicability of the tax. CRA will continue to gather and evaluate information as to the impact of this tax, and therefore will not make a policy election on how to account for GILTI (as part of deferred taxes or as a period expense) until it has received and evaluated the necessary information. Accordingly, no amounts related to GILTI are included within deferred taxes. The components of income before provision for income taxes are as follows (in thousands):
|  | 2017 (52 weeks) |  | 2016 (52 weeks) |  | 2015 (52 weeks) |
Income before provision for income taxes: |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | 12,248 |  | $ | 16,905 |  | $ | 10,565 |
Foreign |  |  | 2,916 |  |  | 4,984 |  |  | 1,250 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total |  | $ | 15,164 |  | $ | 21,889 |  | $ | 11,815 |
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The provision (benefit) for income taxes consists of the following (in thousands):
|  | Fiscal Year |  | Fiscal Year |  | Fiscal Year |
|  | 2017 (52 weeks) |  | 2016 (52 weeks) |  | 2015 (52 weeks) |
Currently payable: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 4,515 |  | $ | (770 | ) | $ | 5,104 |
Foreign |  |  | 493 |  |  | 664 |  |  | 546 |
State |  |  | 804 |  |  | (637 | ) |  | 1,550 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 5,812 |  |  | (743 | ) |  | 7,200 |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  |  | 1,809 |  |  | 5,562 |  |  | (799 | )
Foreign |  |  | (85 | ) |  | 124 |  |  | (307 | )
State |  |  | (73 | ) |  | 2,713 |  |  | (604 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  | $ | 1,651 |  | $ | 8,399 |  | $ | (1,710 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  | $ | 7,463 |  | $ | 7,656 |  | $ | 5,490 |
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A reconciliation of CRA's tax rates with the federal statutory rate is as follows:
|  | Fiscal Year |  | Fiscal Year |  | Fiscal Year |
|  | 2017 |  | 2016 |  | 2015 |
Federal statutory rate |  |  | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income taxes, net of federal income tax benefit |  |  | 3.9 |  |  | 6.1 |  |  | 5.4 |
Tax law changes |  |  | 23.7 |  |  | (0.3 | ) |  | — |
Share-based compensation |  |  | (15.8 | ) |  | — |  |  | — |
Nondeductible/nontaxable items |  |  | 5.1 |  |  | 3.0 |  |  | 6.8 |
Foreign rate differential |  |  | (2.8 | ) |  | (3.3 | ) |  | (2.7 | )
Losses benefited/Change in valuation allowance |  |  | (0.3 | ) |  | (4.9 | ) |  | (6.0 | )
Uncertain tax positions |  |  | (0.1 | ) |  | (0.2 | ) |  | 8.7 |
Other |  |  | 0.5 |  |  | (0.4 | ) |  | (0.7 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
|  |  | 49.2 | % |  | 35.0 | % |  | 46.5 | %
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In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 requires all of the tax effects related to share-based payments to be recorded through the income statement. The amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Accordingly, CRA adopted ASU No. 2016-09 on January 1, 2017, resulting in the recognition of a tax benefit of $0.05 million to retained earnings as of that date. As a result of the new ASU 2016-09, CRA recorded a benefit of $2.2 million related to excess windfall tax deductions during fiscal 2017 in the consolidated statement of operations. The components of CRA's deferred tax assets (liabilities) are as follows (in thousands):
|  | December 30, 2017 |  | December 31, 2016 |
Deferred tax assets: |  |  |  |  |  |  |
Accrued compensation and related expense |  | $ | 11,445 |  | $ | 16,359 |
Allowance for doubtful accounts |  |  | 2,009 |  |  | 2,160 |
Net operating loss carryforwards |  |  | 479 |  |  | 3,278 |
Accrued expenses and other |  |  | 4,356 |  |  | 2,482 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total gross deferred tax assets |  |  | 18,289 |  |  | 24,279 |
Less: valuation allowance |  |  | (8 | ) |  | (2,689 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax assets net of valuation allowance |  |  | 18,281 |  |  | 21,590 |
Deferred tax liabilities: |  |  |  |  |  |  |
Goodwill and other intangible asset amortization |  |  | 3,802 |  |  | 5,670 |
GNU capital gain upon distribution |  |  | 20 |  |  | 245 |
Property and equipment |  |  | 6,111 |  |  | 4,495 |
Tax basis in excess of financial basis of convertible debentures |  |  | — |  |  | 1,254 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total deferred tax liabilities |  |  | 9,933 |  |  | 11,664 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax assets |  | $ | 8,348 |  | $ | 9,926 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
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The net change in the total valuation allowance for fiscal 2017 was a decrease of approximately $2.7 million as compared to fiscal 2016. The $2.7 million net decrease is comprised primarily of the write-off of GNU's net operating losses now that the entity is in the liquidation process. At December 30, 2017, CRA had foreign net operating losses of $1.4 million with an indefinite life. The aggregate changes in the balances of gross unrecognized tax benefits were as follows (in thousands):
|  | December 30, 2017 |  | December 31, 2016 |
Balance at beginning of period |  | $ | 1,059 |  | $ | 1,265 |
Additions for tax positions taken during prior years |  |  | 9 |  |  | — |
Reductions for tax positions taken during prior years |  |  | — |  |  | (21 | )
Additions for tax positions taken during the current year |  |  | — |  |  | 82 |
Reductions as a result of a lapse of the applicable statute of limitations |  |  | (37 | ) |  | — |
Settlements with tax authorities |  |  | — |  |  | (267 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Balance at end of the period |  | $ | 1,031 |  | $ | 1,059 |
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CRA files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which CRA has unrecognized tax benefits, is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, CRA believes that its unrecognized tax benefits reflect the most likely outcome. CRA adjusts these unrecognized tax benefits, and the associated interest, in light of changing facts and circumstances. At the end of fiscal 2017, CRA had $151,000 of interest accrued on its unrecognized tax benefit balance for a total unrecognized tax benefit balance of $1,183,000. Of the total unrecognized tax benefit balance, $61,000 is offset by a future tax deduction when recognized. CRA reported $20,000 of interest and penalties related to unrecognized tax benefits in income tax expense during fiscal 2017, consistent with fiscal 2016. Settlement of any particular position could require the use of cash. Of the total $1,031,000 balance at the end of fiscal 2017, a favorable resolution would result in $1,000,000 being recognized as a reduction to the effective income tax rate in the period of resolution. It is reasonably likely that $289,000 of gross unrecognized tax benefits will reverse within the next twelve months due to lapse of the applicable statute of limitations or exam closures. The number of years with open tax audits varies depending on the tax jurisdiction. CRA's major taxing jurisdiction is the United States where CRA is no longer subject to U.S. federal examinations by the Internal Revenue Service for years before fiscal 2014. Within the significant states where CRA is subject to income tax, CRA is no longer subject to examinations by state taxing authorities before fiscal 2013. CRA's United Kingdom subsidiary's corporate tax returns are no longer subject to examination by Her Majesty's Revenue and Customs for fiscal years before fiscal 2016. During fiscal 2016, an examination by the Internal Revenue Service for fiscal 2014 commenced, and the examination is still ongoing in fiscal 2017. CRA believes its reserves for uncertain tax positions are adequate. CRA has not provided for deferred income taxes or foreign withholding taxes on undistributed earnings and other basis differences that may exist from its foreign subsidiaries as of December 30, 2017 because such earnings are considered to be indefinitely reinvested. CRA does not rely on these unremitted earnings as a source of funds for its domestic business as it expects to have sufficient cash flow in the U.S. to fund its U.S. operational and strategic needs. If CRA were to repatriate its foreign earnings that are indefinitely reinvested, it would accrue substantially no additional tax expense.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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