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Income Taxes | 12 Months Ended
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Dec. 29, 2024
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The components of income tax expense (benefit) are as follows:
| Fiscal Year Ended
| December 29, 2024 |  | December 31, 2023 |  | January 1, 2023
Current: |  |  |  |  |
Federal | $ | 249 |  |  | $ | 8 |  |  | $ | 562 |
State | 39 |  |  | 41 |  |  | 3 |
Total current tax expense | 288 |  |  | 49 |  |  | 565 |
Deferred: |  |  |  |  |
Federal | (303) |  |  | (570) |  |  | 148 |
State | 255 |  |  | — |  |  | 96 |
Total deferred tax (benefit) expense | (48) |  |  | (570) |  |  | 244 |
Income tax expense (benefit) | $ | 240 |  |  | $ | (521) |  |  | $ | 809 |
A reconciliation between the income tax provision and the amount computed by applying the statutory federal tax rate of 21% to loss before income taxes is as follows:
| Fiscal Year Ended
| December 29, 2024 |  | December 31, 2023 |  | January 1, 2023
Taxes at U.S. statutory tax rate | $ | (478) |  |  | $ | (5,379) |  |  | $ | (7,573) |
State income taxes, net of federal income tax benefit | (337) |  |  | (1,053) |  |  | (1,689) |
Permanent differences | 371 |  |  | 580 |  |  | 337 |
Federal tax credits | (607) |  |  | (385) |  |  | — |
Tax reserves | 440 |  |  | — |  |  | — |
Return to provision adjustments | (349) |  |  | (399) |  |  | — |
Remeasurement of deferred tax assets and liabilities | (442) |  |  | 548 |  |  | (1,469) |
Change in valuation allowance | 2,215 |  |  | 6,256 |  |  | 10,035 |
Equity-based compensation | 329 |  |  | (200) |  |  | 652 |
Non-deductible executive compensation | 224 |  |  | 891 |  |  | 541 |
Non-controlling interest | (1,100) |  |  | (1,194) |  |  | (746) |
Other | (26) |  |  | (186) |  |  | 721 |
Income tax expense (benefit) | $ | 240 |  |  | $ | (521) |  |  | $ | 809 |
Effective income tax rate | (10.5) | % |  | 2.0 | % |  | (2.2) | %
The Company’s effective tax rates for the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023 differ from the statutory tax rates primarily due to state income taxes, permanent tax differences, tax credits, and changes in the Company’s deferred tax asset valuation allowance. The tax rate in any period can be affected positively or negatively by adjustments that are required to be reported in the specific period of resolution. The significant components of deferred tax assets and liabilities are reflected in the following table:
| December 29, 2024 |  | December 31, 2023
Deferred tax assets: |  |  |
Deferred compensation and accrued vacation | $ | 179 |  |  | $ | 187 |
Deferred revenue | 13,313 |  |  | 17,295 |
Financing lease | 9,769 |  |  | 9,205 |
Net operating loss and credit carryforwards | 13,280 |  |  | 11,703 |
Inventory | 3,765 |  |  | 5,277 |
Equity-based compensation | 2,240 |  |  | 1,317 |
Research and development expense | 13,290 |  |  | 10,992 |
Interest expense limitation | 4,265 |  |  | 1,973 |
Lease liability | 2,028 |  |  | 2,054 |
Other | 1,782 |  |  | 2,324 |
Total deferred tax assets | 63,911 |  |  | 62,327 |
Deferred tax liabilities: |  |  |
Property and equipment | (35,109) |  |  | (36,180) |
Prepaids and other | (1,224) |  |  | (715) |
Total deferred tax liabilities | (36,333) |  |  | (36,895) |
Net deferred tax asset | 27,578 |  |  | 25,432 |
Valuation allowance | (28,210) |  |  | (26,111) |
Net deferred tax liability after valuation allowance | $ | (632) |  |  | $ | (679) |
Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years and future reversals of taxable temporary differences. Based upon this analysis, a valuation allowance of $28,210 and $26,111 was recorded as of December 29, 2024 and December 31, 2023, respectively, to reduce the net deferred tax assets to the amount that is more likely than not to be realized. The Company had $11,647 and $10,257 of federal and state net operating loss carryforwards as of December 29, 2024 and December 31, 2023, respectively. Federal net operating loss carryforwards do not expire. Federal net operating loss carryforwards are subject to limitation of 80% of taxable income in any given tax year beginning after December 31, 2020. The Company's state net operating loss carryforwards will expire over various periods through 2043 and most are not subject to the aforementioned limitation. The Company is not currently under examination by the Internal Revenue Service or in any state jurisdictions, but may be subject to examination in these jurisdictions in the future. The Company’s tax returns are open to examination for the years 2019 through 2023. The tax effects from uncertain tax positions can be recognized in our consolidated financial statements, only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. Beginning in 2024, the Company has recorded an uncertain tax position related to research and development tax credits. Included in the balance of unrecognized tax benefits as of December 29, 2024 are $69 o f tax benefits that, if recognized, would affect the effective tax rate. Also included in the balance of unrecognized tax benefits as of December 29, 2024, are $371 of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes and valuation allowance. The following tables set forth changes in our total gross unrecognized tax benefit liabilities, excluding accrued interest, for the year ended December 29, 2024:
Balance at December 31, 2023 | $ | — |
Tax Positions - Additions | 440
Tax Positions - Reductions | 0
Balance at December 29, 2024 | $ | 440 |
The Company accrues income tax-related interest and penalties, as applicable, in income tax expense in its consolidated statements of operations. No interest and penalties were incurred during the fiscal years ended December 29, 2024, December 31, 2023, and January 1, 2023 as the accrued interest was not significant. The company does not anticipate significant changes in its uncertain tax position over the next 12 months.

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