Income Taxes

12 Months Ended

Jun. 27, 2019

NOTE 7 — INCOME TAXES

The provision for income taxes is based entirely on income before income taxes earned in the United States, and is as follows for the last three fiscal years:


	For the Year Ended:
	June 27, 2019			June 28, 2018			June 29, 2017
Current:
Federal	$	10,309		$	10,722		$	17,013
State		2,951			2,464			2,744

Total current expense		13,260			13,186			19,757
Deferred:
Deferred federal		395			3,902			(1,698	)
Deferred state		(693	)		(238	)		(46	)

Total deferred (benefit) expense		(298	)		3,664			(1,744	)

Total income tax expense	$	12,962		$	16,850		$	18,013

The reconciliations of income taxes at the statutory federal income tax rate to income tax expense reported in the Consolidated Statements of Comprehensive Income for the last three fiscal years are as follows:


	June 27, 2019			June 28, 2018			June 29, 2017
Federal statutory income tax rate		21.0	%		28.1	%		35.0	%
State income taxes, net of federal benefit		3.1			3.1			3.3
Impact of Tax Reform		—			6.3			—
Section 162(m) Limitation		1.1			—			—
Research and development tax credit		(0.3	)		(0.2	)		(0.1	)
Domestic manufacturing deduction		—			(2.2	)		(3.1	)
Windfall tax benefits		(0.2	)		(1.0	)		(1.8	)
Uncertain tax positions		0.1			0.1			0.1
Other		(0.1	)		(0.1	)		(0.1	)

Effective tax rate		24.7	%		34.1	%		33.3	%

Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement basis and the tax basis of assets and liabilities using enacted statutory tax rates applicable to future years. Deferred tax assets and liabilities are comprised of the following:


	June 27, 2019			June 28, 2018
Deferred tax assets (liabilities):
Accounts receivable	$	332		$	305
Employee compensation		1,673			810
Inventory		309			273
Depreciation and amortization		(10,847	)		(9,504	)
Capitalized leases		1,117			1,020
Goodwill and intangible assets		3,182			3,160
Retirement plan		6,599			5,484
Workers’ compensation		1,862			1,692
Share based compensation		1,305			1,281
Capital loss carryforward		—			112
Other		191			503
Less valuation allowance		—			(112	)

Net deferred tax asset — long term		5,723			5,024

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income of the character necessary during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income and

tax-planning

strategies in making this assessment. During fiscal 2019 and fiscal 2018 the net change in the total valuation allowance was not material. If or when recognized, the tax benefits relating to any reversal of the valuation allowance will be recognized as a reduction of income tax expense.

For the years ending June 27, 2019 and June 28, 2018, unrecognized tax benefits and accrued interest and penalties were $

259

and $

214

. Accrued interest and penalties related to uncertain tax positions are not material for any periods presented. Interest and penalties within income tax expense were not material for any period presented. The total gross amounts of unrecognized tax benefits were $

240

and $

207

at June 27, 2019 and June 28, 2018, respectively.

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


	June 27, 2019			June 28, 2018		June 29, 2017
Beginning balance	$	207		$	174	$	24
Gross increases — tax positions in prior year		—			6		7
Gross decreases — tax positions in prior year		(6	)		—		—
Settlements		—			—		—
Gross increases — tax positions in current year		39			27		23
Lapse of statute of limitations		—			—		120

Ending balance	$	240		$	207	$	174

Unrecognized tax benefits, that if recognized, would affect the annual effective tax rate on income from continuing operations, are as follows:


	June 27, 2019		June 28, 2018		June 29, 2017
Unrecognized tax benefits that would affect annual effective tax rate	$	217	$	177	$	136

During fiscal 2019, the change in unrecognized tax benefits due to statute expiration was not material. We do not anticipate that total unrecognized tax benefits will significantly change in the next twelve months.

There were certain changes in state tax laws during the period, for which the impact was insignificant. We file income tax returns with federal and state tax authorities within the United States of America. Our federal and Illinois tax returns are open for audit for fiscal 2016 through 2018. Our California tax returns for fiscal 2015 through 2018 are open for audit. No other tax jurisdictions are material to us.