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Income Taxes
 9 Months Ended
Oct. 01, 2024
Income Tax Disclosure [Abstract]  
Income Taxes

7. INCOME TAXES

We calculate our interim income tax provision in accordance with ASC Topic 270, “Interim Reporting” and ASC Topic 740, “Accounting for Income Taxes.” The related tax expense or benefit is recognized in the interim period in which it occurs. In addition, the effect of changes in enacted tax laws, rates or tax status is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires significant estimates and judgment including estimating the expected operating income for the year, permanent and temporary differences because of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets generated in the current fiscal year. The accounting estimates used to compute income tax expense may change as new events occur, additional information is obtained or the tax environment changes.

Our effective income tax rate for the thirty-nine weeks ended October 1, 2024 was a benefit of 15.0% compared to a benefit rate of 44.9% for the comparable thirty-nine weeks ended October 3, 2023. The effective tax rate benefit for the thirty-nine weeks ended October 1, 2024 and October 3, 2023, was different from the statutory tax rate primarily as a result of significant Federal Insurance Contributions Act (“FICA”) tax tip credits.

As of October 1, 2024, we had unrecognized tax benefits of approximately $1.1 million, of which approximately $1.0 million, if reversed, would impact our effective tax rate.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is the following (in thousands):

 

 

 

For the Thirty-Nine Weeks Ended

 

 

 

October 1, 2024

 

 

October 3, 2023

 

Beginning gross unrecognized tax benefits

 

$

967

 

 

$

1,249

 

Increases for tax positions taken in prior years

 

 

29

 

 

 

102

 

Increases for tax positions taken in the current year

 

 

100

 

 

 

123

 

Decreases due to lapse of statute of limitations

 

 

—

 

 

 

(236

)

Ending gross unrecognized tax benefits

 

$

1,096

 

 

$

1,238

 

 

Our uncertain tax positions are related to tax years that remain subject to examination by tax agencies. As of October 1, 2024, the earliest tax year still subject to examination by the Internal Revenue Service is 2020, although 2015 is still open due to amendments related to a net operating loss carryback. The earliest year still subject to examination by a significant state or local taxing authority is 2019.