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Income Taxes | 12 Months Ended
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Dec. 28, 2019
Income Taxes |
Income Taxes | 8. Income Taxes The components of income before provision for income taxes are as follows (in thousands):
|  | Year Ended |  | Year Ended |  | Year Ended
|  | December 28, |  | December 29, |  | December 30,
|  | 2019 |  | 2018 |  | 2017
|  | (52 weeks) |  | (52 weeks) |  | (52 weeks)
Income before provision for income taxes: |  |  |  |  |  |  |  |  |
U.S. |  | $ | 20,778 |  | $ | 21,118 |  | $ | 12,248
Foreign |  |  | 6,019 |  |  | 7,815 |  |  | 2,916
Total |  | $ | 26,797 |  | $ | 28,933 |  | $ | 15,164
The provision (benefit) for income taxes consists of the following (in thousands):
|  | Year Ended |  | Year Ended |  | Year Ended
|  | December 28, |  | December 29, |  | December 30,
|  | 2019 |  | 2018 |  | 2017
|  | (52 weeks) |  | (52 weeks) |  | (52 weeks)
Currently payable: |  |  |  |  |  |  |  |  |
Federal |  | $ | 4,252 |  | $ | 4,015 |  | $ | 4,515
Foreign |  |  | 1,119 |  |  | 1,487 |  |  | 493
State |  |  | 1,838 |  |  | 1,788 |  |  | 804
|  |  | 7,209 |  |  | 7,290 |  |  | 5,812
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (869) |  |  | (384) |  |  | 1,809
Foreign |  |  | 331 |  |  | (88) |  |  | (85)
State |  |  | (621) |  |  | (357) |  |  | (73)
|  |  | (1,159) |  |  | (829) |  |  | 1,651
|  | $ | 6,050 |  | $ | 6,461 |  | $ | 7,463
A reconciliation of CRA’s tax rates with the federal statutory rate is as follows:
|  | Fiscal Year |  | Fiscal Year |  | Fiscal Year |
|  | 2019 |  | 2018 |  | 2017 |
Federal statutory rate |  | 21.0 | % | 21.0 | % | 35.0 | %
State income taxes, net of federal income tax benefit |  | 5.5 |  | 4.9 |  | 3.9 |
Tax law changes |  | — |  | 0.9 |  | 23.7 |
Share-based compensation |  | (5.0) |  | (6.3) |  | (15.8) |
Meals & Entertainment Expense |  | 1.7 |  | 1.3 |  | 3.0 |
Executive Compensation |  | 1.6 |  | 1.0 |  | 1.8 |
Foreign rate differential |  | — |  | — |  | (2.8) |
Uncertain tax positions |  | (2.5) |  | (1.1) |  | (0.1) |
Other |  | 0.3 |  | 0.6 |  | 0.5 |
|  | 22.6 | % | 22.3 | % | 49.2 | %
Effects of the Tax Cuts and Jobs Act On December 22, 2017, 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, migrates from a “worldwide” system of taxation to a territorial system, and includes 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 SAB 118, which allows registrants to record provisional amounts during a one year "measurement period" similar to that used when accounting for business combinations. During fiscal 2018, CRA applied the guidance in SAB 118 when accounting for the enactment-date effects of the Tax Act. As of December 29, 2018, CRA had completed its accounting for all the tax effects of the Tax Act. Deferred tax assets and liabilities In response to the Tax Act, CRA remeasured its U.S. related deferred tax assets and liabilities based on the expected rates at which they may reverse in the future, which is generally 21%. CRA recorded a provisional amount of $3.6 million as of December 30, 2017 related to the remeasurement of its deferred tax balances, and further refined the remeasurement during fiscal 2018 by an immaterial amount. Foreign Tax Effects The Tax Act subjects a U.S. shareholder to current tax on global intangible low-taxed income ("GILTI") earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740 No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI resulting from those items in the year the tax is incurred. As of the December 29, 2018 reporting period, CRA had elected to recognize the tax on GILTI as a period expense in the period the tax is incurred. As such, CRA has included a GILTI provision associated with current-year operations solely within the estimated annual effective tax rate ("EAETR") and has not provided additional GILTI on deferred items. The Tax Act allows U.S. corporations to take a deduction related to its foreign-derived intangible income ("FDII") produced in the U.S. CRA has calculated its FDII deduction for the fiscal year ended December 28, 2019 by an immaterial amount. The components of CRA’s deferred tax assets (liabilities) are as follows (in thousands):
|  | December 28, |  | December 29,
|  | 2019 |  | 2018
Deferred tax assets: |  |  |  |  |  |
Accrued compensation and related expense |  | $ | 12,842 |  | $ | 12,691
Allowance for doubtful accounts |  |  | 2,023 |  |  | 1,694
Net operating loss carryforwards |  |  | 335 |  |  | 402
Lease liabilities |  |  | 39,747 |  |  | —
Deferred rent, accruals, and other |  |  | 119 |  |  | 5,656
Total gross deferred tax assets |  |  | 55,066 |  |  | 20,443
Less: valuation allowance |  |  | — |  |  | —
Total deferred tax assets net of valuation allowance |  |  | 55,066 |  |  | 20,443
Deferred tax liabilities: |  |  |  |  |  |
Goodwill and other intangible asset amortization |  |  | 3,650 |  |  | 4,295
Right-of-Use assets |  |  | 33,012 |  |  | —
Property and equipment |  |  | 7,690 |  |  | 6,762
Prepaids and other |  |  | 548 |  |  | 358
Total deferred tax liabilities |  |  | 44,900 |  |  | 11,415
Net deferred tax assets |  | $ | 10,166 |  | $ | 9,028
At December 28, 2019, CRA had US local and foreign net operating losses of $1.1 million with lives ranging from 20 years to indefinite. The aggregate changes in the balances of gross unrecognized tax benefits were as follows (in thousands):
|  | Fiscal Year |  | Fiscal Year
|  | 2019 |  | 2018
Balance at beginning of period |  | $ | 867 |  | $ | 1,031
Additions for tax positions taken during prior years |  |  | — |  |  | 132
Reductions for tax positions taken during prior years |  |  | (25) |  |  | —
Additions for tax positions taken during the current year |  |  | — |  |  | —
Reductions as a result of a lapse of the applicable statutes of limitations |  |  | (600) |  |  | (296)
Settlements with tax authorities |  |  | — |  |  | —
Balance at end of the period |  | $ | 242 |  | $ | 867
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 2019, accrued interest for uncertain tax positions was immaterial. CRA’s total unrecognized tax benefit at the end of fiscal 2019 is $0.2 million. Settlement of any particular position could require the use of cash. Of the total $0.2 million balance at the end of fiscal 2019, a favorable resolution would result in $0.2 million being recognized as a reduction to the effective income tax rate in the period of resolution. It is reasonably likely that $0.1 million 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 2016. Within the significant states where CRA is subject to income tax, CRA is no longer subject to examinations by state taxing authorities before fiscal 2015. 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 2018. During fiscal 2019, an examination by the German Tax Authority for fiscal years 2014-2016 commenced. 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 28, 2019 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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