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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision (benefit) for income taxes for the years ended December 31, 2022, 2021 and 2020 was as follows:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Provision (benefit) for income taxes | (In millions)
Current |  |  |  |  |
Federal | $ | 27.5 |  |  | $ | 20.2 |  |  | $ | 11.0 |
State | 5.5 |  |  | 4.6 |  |  | 3.1 |
Foreign | 1.8 |  |  | 1.4 |  |  | 1.3 |
| 34.8 |  |  | 26.2 |  |  | 15.4 |
Deferred |  |  |  |  |
Federal | (3.8) |  |  | (2.3) |  |  | (17.3) |
State | 2.7 |  |  | 0.2 |  |  | (2.7) |
| (1.1) |  |  | (2.1) |  |  | (20.0) |
Provision (benefit) for income taxes | $ | 33.7 |  |  | $ | 24.1 |  |  | $ | (4.6) |
The provision (benefit) for income taxes differs from the expected federal income tax rates as follows:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Statutory federal income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Non-deductibility of goodwill | 0.8 |  |  | — |  |  | (17.9) |
Non-deductibility of officer's compensation | 2.9 |  |  | 2.2 |  |  | (0.9) |
State and other taxes, net of federal tax benefit | 3.1 |  |  | 3.1 |  |  | 1.2 |
Excess tax deficiencies or benefits | (0.5) |  |  | (7.1) |  |  | 0.1 |
Change in unrecognized tax benefits | — |  |  | (0.1) |  |  | 2.0 |
Change in valuation allowance | (0.3) |  |  | 0.5 |  |  | (1.5) |
Changes in tax rates and state tax laws | 3.4 |  |  | 0.2 |  |  | (0.4) |
General business credits | (1.4) |  |  | (0.9) |  |  | 0.8 |
Other | 0.3 |  |  | 0.8 |  |  | (0.2) |
Effective tax rate | 29.3 | % |  | 19.7 | % |  | 4.2 | %
The fiscal year 2022 effective tax rate of 29.3% applied to pretax book income was different than the statutory Federal income tax rate of 21% due to the state and local income taxes and the non-deductibility of executive compensation. The effective tax rate further increased due to the increase in the effective state tax rate applied to revaluing deferred tax balances. The increase in the effective state tax rate was due to the non-recurring refranchising of 69 Applebee’s company-operated restaurants in the fourth quarter of 2022 and various state legislative changes. The fiscal year 2021 effective tax rate of 19.7% applied to pretax book income was different than the statutory Federal income tax rate of 21% primarily due to the one-time recognition of excess tax benefits on stock-based compensation, offset by non-deductibility of executive compensation and state and local income taxes. The fiscal year 2020 effective tax rate of 4.2% applied to pretax book loss was significantly different than the statutory Federal income tax rate of 21% primarily because of the $92.2 million impairment of goodwill incurred, which was not deductible for income tax purposes and therefore had no associated tax benefit. The Company files federal income tax returns and the Company or one of its subsidiaries file income tax returns in various state and international jurisdictions. With few exceptions, the Company is no longer subject to federal tax examinations by tax authorities for years before 2018 and state or non-United States tax examinations by tax authorities for years before 2011. The Company believes that adequate reserves have been recorded relating to all matters contained in the tax periods open to examination. Net deferred tax assets (liabilities) at December 31, 2022 and 2021 consisted of the following components:
| 2022 |  | 2021
| (In millions)
Lease liabilities | $ | 93.6 |  |  | $ | 112.9 |
Employee compensation | 9.7 |  |  | 12.1 |
Revenue recognition | 37.1 |  |  | 35.4 |
Other | 8.4 |  |  | 8.4 |
Deferred tax assets | 148.8 |  |  | 168.8 |
Valuation allowance | (3.5) |  |  | (4.2) |
Total deferred tax assets after valuation allowance | 145.3 |  |  | 164.6 |
Recognition of franchise and equipment sales | (6.7) |  |  | (8.2) |
Capitalization and depreciation(1) | (121.0) |  |  | (122.7) |
Lease assets | (90.8) |  |  | (108.6) |
Other | (1.5) |  |  | (1.3) |
Deferred tax liabilities | (220.0) |  |  | (240.8) |
Net deferred tax liabilities | $ | (74.7) |  |  | $ | (76.2) |
_________________________________ (1) Primarily related to the 2007 Applebee's acquisition. As of each reporting date, the Company considers new evidence, both positive and negative, that could impact management’s view with regards to future realization of deferred tax assets. During fiscal 2022, we released a valuation allowance of $1.1 million related to state deferred tax assets based on positive evidence which suggests that deferred tax assets will be more likely than not to be realizable in the future. We also believe that the future realizability of benefits arising from foreign tax credit carryforwards and certain state net operating loss carryforwards does not meet the more-likely-than-not threshold. In recognition of this risk, there is a valuation allowance of $3.5 million as of December 31, 2022. The Company had gross operating loss carryforwards for state tax purposes of $37.9 million and $23.6 million as of December 31, 2022 and 2021, respectively. Certain net operating loss carryforwards will expire in 2029 if not utilized. The total gross unrecognized tax benefit as of December 31, 2022 and 2021 was $2.1 million and $1.9 million, respectively, excluding interest, penalties and related income tax benefits. If recognized, these amounts would affect the Company's effective income tax rates. The Company estimates the unrecognized tax benefits may decrease over the upcoming 12 months by an amount up to less than $0.5 million related to settlements with taxing authorities and statute of limitations expirations. For the remaining liability, due to the uncertainties related to these tax matters, the Company is unable to make a reasonable estimate as to when cash settlement with a taxing authority will occur. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
| (In millions)
Unrecognized tax benefit as of January 1 | $ | 1.9 |  |  | $ | 2.2 |  |  | $ | 7.6 |
Changes for tax positions of prior years | 0.1 |  |  | 0.5 |  |  | — |
Increases for tax positions related to the current year | 0.4 |  |  | 0.3 |  |  | 0.2 |
Decreases relating to settlements and lapsing of statutes of limitations | (0.3) |  |  | (1.1) |  |  | (5.6) |
Unrecognized tax benefit as of December 31 | $ | 2.1 |  |  | $ | 1.9 |  |  | $ | 2.2 |
As of December 31, 2022, the accrued interest was $0.7 million and accrued penalties were less than $0.1 million, excluding any related income tax benefits. As of December 31, 2021, the accrued interest and penalties were $0.6 million and less than $0.1 million, respectively, excluding any related income tax benefits. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as a component of the income tax provision recognized in the Consolidated Statements of Comprehensive Income (Loss).

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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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