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Income Taxes | 12 Months Ended
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Jan. 03, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | 11. Income Taxes Income tax benefit for the last three fiscal years consists of the following (in thousands):
|  | Fiscal Year |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 647 |  |  | $ | 2,776 |  |  | $ | (5,360 | )
State |  |  | 379 |  |  |  | 323 |  |  |  | (314 | )
|  |  | 1,026 |  |  |  | 3,099 |  |  |  | (5,674 | )
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | (12,653 | ) |  |  | (16,872 | ) |  |  | (21,403 | )
State |  |  | (757 | ) |  |  | (1,803 | ) |  |  | (4,988 | )
|  |  | (13,410 | ) |  |  | (18,675 | ) |  |  | (26,391 | )
Income tax benefit |  | $ | (12,384 | ) |  | $ | (15,576 | ) |  | $ | (32,065 | )
Income tax benefit for the last three fiscal years differs from the amount that would result from applying the federal statutory rate as follows:
|  | Fiscal Year |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Income tax at statutory rates |  |  | (21.0 | )% |  |  | (21.0 | )% |  |  | (21.0 | )%
State income taxes, net of federal benefit |  |  | (10.4 | ) |  |  | (5.0 | ) |  |  | (5.2 | )
Permanent differences |  |  | 17.3 |  |  |  | 0.9 |  |  |  | 0.3 |
Income tax credits |  |  | (156.8 | ) |  |  | (58.9 | ) |  |  | (5.1 | )
Return to provision |  |  | (4.3 | ) |  |  | 2.1 |  |  |  | — |
Prior year tax credit true-up |  |  | 14.1 |  |  |  | — |  |  |  | (0.4 | )
Benefit from net operating loss carryback |  |  | 1.8 |  |  |  | 2.8 |  |  |  | (5.2 | )
Change in valuation allowance |  |  | 6.8 |  |  |  | (1.1 | ) |  |  | — |
Other, net |  |  | 3.4 |  |  |  | (1.0 | ) |  |  | 1.0 |
|  |  | (149.1 | )% |  |  | (81.2 | )% |  |  | (35.6 | )%
The components of the deferred income tax asset (liability) consist of the following (in thousands):
|  | January 3, 2023 |  |  | December 28, 2021 |
Deferred income tax asset: |  |  |  |  |  |
Accrued expenses |  | $ | 11,887 |  |  | $ | 11,803 |
Other |  |  | 3,192 |  |  |  | 5,305 |
Deferred revenues |  |  | 28 |  |  |  | 28 |
Stock-based compensation |  |  | 4,596 |  |  |  | 4,123 |
Operating lease liability |  |  | 122,982 |  |  |  | 123,544 |
Income tax credits |  |  | 56,780 |  |  |  | 41,826 |
Net operating losses |  |  | 7,347 |  |  |  | 5,569 |
State tax |  |  | 80 |  |  |  | 72 |
Gross deferred income tax asset |  |  | 206,892 |  |  |  | 192,270 |
Valuation allowance |  |  | (1,151 | ) |  |  | (586 | )
Deferred income tax asset, net of valuation allowance |  |  | 205,741 |  |  |  | 191,684 |
Deferred income tax liability: |  |  |  |  |  |
Property and equipment |  |  | (51,659 | ) |  |  | (52,371 | )
Intangible assets |  |  | (2,895 | ) |  |  | (1,646 | )
Operating lease assets |  |  | (108,307 | ) |  |  | (108,333 | )
Smallwares |  |  | (4,568 | ) |  |  | (4,432 | )
Deferred income tax liability |  |  | (167,429 | ) |  |  | (166,782 | )
Net deferred income tax asset |  | $ | 38,312 |  |  | $ | 24,902 |
At January 3, 2023, we had federal and California income tax credit carryforwards of approximately $55.9 million and $0.8 million, respectively, consisting primarily of the credit for FICA taxes paid on reported team member tip income and California enterprise zone credits. The FICA tax credits will begin to expire in 2038, and the California enterprise zone credits will begin to expire in 2023. At January 3, 2023, we have a federal net operating loss (“NOL”) of approximately $4.0 million and state NOLs of approximately $142.8 million that will expire over various periods beginning 2023. We have completed a thorough analysis of our ability to use our federal and state tax credit and net operating loss carry forwards. As of January 3, 2023 and December 28, 2021, we have determined that no valuation allowance is required against federal tax credit carryforwards; however, we have recorded a valuation allowance against certain state net operating loss and tax credit carryforwards of $1.2 million and $0.6 million, respectively, net of the federal benefit which are not more likely than not to be realized prior to expiration. We recognize interest and penalties related to uncertain tax positions in income tax expense. At January 3, 2023 and December 28, 2021, we had accrued $0.1 million for interest and penalties with respect to uncertain tax positions. As of January 3, 2023, unrecognized tax benefits recorded was approximately $1.2 million, of which approximately $1.1 million, if reversed would impact our effective tax rate. We anticipate no change in our liability for unrecognized tax benefits within the next twelve-month period. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | Fiscal Year |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Gross unrecognized tax benefits at beginning of year |  | $ | 1,198 |  |  | $ | 1,333 |  |  | $ | 1,345 |
Increases for tax positions taken in prior years |  |  | 3 |  |  |  | — |  |  |  | 190 |
Decreases for tax positions taken in prior years |  |  | (29 | ) |  |  | (20 | ) |  |  | (291 | )
Increases for tax positions taken in the current year |  |  | 91 |  |  |  | 69 |  |  |  | 89 |
Lapse in statute of limitations |  |  | (14 | ) |  |  | (184 | ) |  |  | — |
Gross unrecognized tax benefits at end of year |  | $ | 1,249 |  |  | $ | 1,198 |  |  | $ | 1,333 |
Our uncertain tax positions are related to tax years that remain subject to examination by tax agencies. As of January 3, 2023, the earliest tax year still subject to examination by the Internal Revenue Service is 2015. The earliest year still subject to examination by a significant state or local taxing jurisdiction is 2018.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI https://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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