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Income Taxes | 12 Months Ended
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Jan. 02, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income before provision for income taxes are as follows (in thousands):
| Year Ended |  | Year Ended |  | Year Ended
| January 2, 2021 (53 weeks) |  | December 28, 2019 (52 weeks) |  | December 29, 2018 (52 weeks)
Income before provision for income taxes: |  |  |  |  |
U.S. | $ | 26,054 |  |  | $ | 20,778 |  |  | $ | 21,118 |
Foreign | 7,568 |  |  | 6,019 |  |  | 7,815 |
Total | $ | 33,622 |  |  | $ | 26,797 |  |  | $ | 28,933 |
The provision (benefit) for income taxes consists of the following (in thousands):
| Year Ended |  | Year Ended |  | Year Ended
| January 2, 2021 (53 weeks) |  | December 28, 2019 (52 weeks) |  | December 29, 2018 (52 weeks)
Currently payable: |  |  |  |  |
Federal | $ | 4,039 |  |  | $ | 4,252 |  |  | $ | 4,015 |
Foreign | 1,335 |  |  | 1,119 |  |  | 1,487 |
State | 2,627 |  |  | 1,838 |  |  | 1,788 |
Total current expense | 8,001 |  |  | 7,209 |  |  | 7,290 |
Deferred: |  |  |  |  |
Federal | 1,170 |  |  | (869) |  |  | (384) |
Foreign | 309 |  |  | 331 |  |  | (88) |
State | (365) |  |  | (621) |  |  | (357) |
Total deferred expense (benefit) | 1,114 |  |  | (1,159) |  |  | (829) |
Total tax expense | $ | 9,115 |  |  | $ | 6,050 |  |  | $ | 6,461 |
A reconciliation of CRA's tax rates with the federal statutory rate is as follows:
| Fiscal Year |  | Fiscal Year |  | Fiscal Year
| 2020 |  | 2019 |  | 2018
Federal statutory rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal income tax benefit | 5.8 |  |  | 5.5 |  |  | 4.9 |
Tax law changes | 0.2 |  |  | — |  |  | 0.9 |
Share-based compensation | (1.8) |  |  | (5.0) |  |  | (6.3) |
Meals & Entertainment Expense | 0.2 |  |  | 1.7 |  |  | 1.3 |
Executive Compensation | 1.6 |  |  | 1.6 |  |  | 1.0 |
Uncertain tax positions | (0.1) |  |  | (2.5) |  |  | (1.1) |
Other | 0.2 |  |  | 0.3 |  |  | 0.6 |
Annual effective tax rate | 27.1 | % |  | 22.6 | % |  | 22.3 | %
The components of CRA's deferred tax assets (liabilities) are as follows (in thousands):
| January 2, 2021 |  | December 28, 2019
Deferred tax assets: |  |  |
Accrued compensation and related expense | $ | 15,453 |  |  | $ | 12,842 |
Allowance for doubtful accounts | 1,535 |  |  | 2,023 |
Net operating loss carryforwards | 194 |  |  | 335 |
Lease liabilities | 38,146 |  |  | 39,747 |
Foreign exchange and other | 79 |  |  | 119 |
Total gross deferred tax assets | 55,407 |  |  | 55,066 |
Less: valuation allowance | — |  |  | — |
Total deferred tax assets, net of valuation allowance | 55,407 |  |  | 55,066 |
Deferred tax liabilities: |  |  |
Goodwill and other intangible asset amortization | 3,523 |  |  | 3,650 |
Right-of-Use assets | 30,761 |  |  | 33,012 |
Property and equipment | 11,595 |  |  | 7,690 |
Prepaids and other | 586 |  |  | 548 |
Total deferred tax liabilities | 46,465 |  |  | 44,900 |
Net deferred tax assets | $ | 8,942 |  |  | $ | 10,166 |
At January 2, 2021, CRA had U.S. local and foreign net operating losses of $1.3 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
| 2020 |  | 2019
Balance at beginning of period | $ | 242 |  |  | $ | 867 |
Additions for tax positions taken during prior years | 43 |  |  | — |
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 | (82) |  |  | (600) |
Settlements with tax authorities | — |  |  | — |
Balance at end of the period | $ | 203 |  |  | $ | 242 |
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 2020, accrued interest for uncertain tax positions was immaterial. CRA's total unrecognized tax benefit at the end of fiscal 2020 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 2020, 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 $0.2 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 2017. Within the significant states where CRA is subject to income tax, CRA is no longer subject to examinations by state taxing authorities before fiscal 2016. CRA's United Kingdom ("UK") subsidiary's corporate tax returns are no longer subject to examination by Her Majesty's Revenue and Customs for years before fiscal 2019. 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. During the fourth quarter of fiscal 2020, CRA considered the operating needs of the UK business, as well as the tax implications of no longer asserting indefinite reinvestment with respect to the UK operations. As a result of both a qualitative and quantitative analysis, $0.1 million of deferred taxes associated with previously taxed and untaxed post fiscal 2018 UK earnings that are no longer considered permanently reinvested was recorded. The deferred taxes are a tax consequence of foreign exchange translation, and as such, are recorded as a component of foreign currency translation adjustments on the consolidated statements of comprehensive income. Deferred income taxes or foreign withholding taxes, estimated to be $0.3 million, have not been recorded for other jurisdictions as those earnings are considered to be permanently reinvested. Effects of the CARES Act On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was signed into law, which included a retroactive, technical correction that allows 100% bonus depreciation for qualified improvement property (“QIP”). This technical correction became effective as of the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) and effected a $2.2 million tax receivable stemming from 2018 and 2019 leasehold improvements that previously had a thirty-nine year life. Additionally, the CARES Act allows for employers to defer the payment of the employer share of the Social Security taxes to be paid in two installments: the first by December 31, 2021, and the remainder by December 31, 2022. Accordingly, we have deferred a total of $2.7 million of tax which creates a book/tax temporary difference until paid.

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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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