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Income Taxes | 12 Months Ended
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Dec. 26, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provisions for income taxes were as follows:
| Fiscal Year Ended
| December 26, 2018 |  | December 27, 2017 |  | December 28, 2016
| (In thousands)
Current: |  |  |  |  |
Federal | $ | (632 | ) |  | $ | 3,688 |  |  | $ | 4,270 |
State and local | 1,833 |  |  | 2,071 |  |  | 2,316 |
Foreign | 1,042 |  |  | 961 |  |  | 912 |
Deferred: |  |  |  |  |
Federal | 5,432 |  |  | 10,075 |  |  | 8,225 |
State and local | 761 |  |  | 196 |  |  | 619 |
Increase of valuation allowance | 121 |  |  | 216 |  |  | 132 |
Total provision for income taxes | $ | 8,557 |  |  | $ | 17,207 |  |  | $ | 16,474 |
The reconciliation of income taxes at the U.S. federal statutory tax rate to our effective tax rate was as follows:
| December 26, 2018 |  | December 27, 2017 |  | December 28, 2016
Statutory provision rate | 21 | % |  | 35 | % |  | 35 | %
State and local taxes, net of federal income tax benefit | 6 |  |  | 5 |  |  | 9 |
Wage addback on income tax credits earned | — |  |  | 2 |  |  | 3 |
General business credits generated | (5 | ) |  | (5 | ) |  | (9 | )
Foreign tax credits generated | (2 | ) |  | (2 | ) |  | (12 | )
Pension plan liquidation | — |  |  | — |  |  | 18 |
Share-based compensation | (3 | ) |  | (3 | ) |  | — |
Impact of tax reform | — |  |  | (3 | ) |  | — |
Other | (1 | ) |  | 1 |  |  | 2 |
Effective tax rate | 16 | % |  | 30 | % |  | 46 | %
On December 22, 2017, The Tax Cut and Jobs Act of 2017 (the “Tax Act”) was signed into law. The Tax Act reduces the U.S. statutory tax rate from 35% to 21% for years after 2017. Accordingly, we revalued our deferred taxes as of December 27, 2017 to reflect the reduced rate that will apply in future periods when these deferred taxes are realized. The net tax benefit recognized in 2017 related to the Tax Act was $1.6 million. The 2018 rate was primarily impacted by the Tax Act statutory tax rate reduction, state taxes and the generation of employment and foreign tax credits. In addition, the 2018 rate benefited $1.4 million from items related to share-based compensation. For the 2017 period, the difference in the overall effective rate from the U.S. statutory rate was primarily due to state taxes and the generation of employment and foreign tax credits. The 2017 rate also benefited $1.7 million from share-based compensation and $1.6 million from the revaluing of deferred tax assets and liabilities required under the Tax Act. For the 2016 period, the difference in the overall effective rate from the U.S. statutory rate was primarily due to state taxes, the generation of employment tax credits, the Pension Plan liquidation, and foreign tax credits generated with the filings of federal amended tax returns. The 2016 rate was impacted by the recognition of a $2.1 million tax benefit related to the $24.3 million pre-tax settlement loss on the Pension Plan liquidation. This benefit was at a rate lower than the effective tax rate due to the previous recognition of an approximate $7.2 million tax benefit recognized with the reversal of our valuation allowance in 2011. In addition, we amended prior years’ U.S. tax returns in order to maximize a foreign tax credit in lieu of a foreign tax deduction, resulting in a net tax benefit of approximately $3.7 million during the year. The following table represents the approximate tax effect of each significant type of temporary difference that resulted in deferred income tax assets or liabilities.
| December 26, 2018 |  | December 27, 2017
| (In thousands)
Deferred tax assets: |  |  |
Self-insurance accruals | $ | 4,647 |  |  | $ | 4,364 |
Capitalized leases | 2,045 |  |  | 1,718 |
Accrued exit cost | 445 |  |  | 487 |
Interest rate swaps | 1,157 |  |  | 566 |
Pension, other retirement and compensation plans | 10,568 |  |  | 10,328 |
Deferred income | 5,099 |  |  | 609 |
Other accruals | 633 |  |  | — |
Alternative minimum tax credit carryforwards | 928 |  |  | 3,534 |
General business and foreign tax credit carryforwards - state and federal | 11,061 |  |  | 13,355 |
Net operating loss carryforwards - state | 13,899 |  |  | 14,096 |
Total deferred tax assets before valuation allowance | 50,482 |  |  | 49,057 |
Less: valuation allowance | (13,199 | ) |  | (13,078 | )
Total deferred tax assets | 37,283 |  |  | 35,979 |
Deferred tax liabilities: |  |  |
Intangible assets | (14,631 | ) |  | (14,578 | )
Deferred finance costs | (286 | ) |  | (111 | )
Fixed assets | (5,033 | ) |  | (4,179 | )
Other accruals | — |  |  | (166 | )
Total deferred tax liabilities | (19,950 | ) |  | (19,034 | )
Net deferred tax asset | $ | 17,333 |  |  | $ | 16,945 |
At December 26, 2018, we had available, on a consolidated basis, federal general business credit carryforwards of approximately $7.4 million, most of which expire between years 2036 and 2038. We also had available alternative minimum tax (“AMT”) credit carryforwards of approximately $0.9 million, which under the Tax Act are now considered refundable credits estimated to be fully received by 2019. We will continue to include the AMT credits in our deferred tax assets until they are fully refunded or utilized. It is more likely than not that we will be able to utilize our credit carryforwards prior to expiration. In addition, it is more likely than not we will be able to utilize all of our existing temporary differences and a portion of our state tax net operating losses and state tax credit carryforwards prior to their expiration. Of the $13.2 million of remaining valuation allowance, approximately $11.8 million represents South Carolina net operating loss carryforwards that will never be utilized. Prior to 2005, Denny’s had ownership changes within the meaning of Section 382 of the Internal Revenue Code. In general, Section 382 places annual limitations on the use of certain tax attributes, such as AMT tax credit carryforwards, in existence at the ownership change date. It is our position that any pre-2005 AMT tax credits can be utilized as of December 26, 2018. The occurrence of an additional ownership change could limit our ability to utilize our current income tax credits generated after 2004. The following table provides a reconciliation of the beginning and ending amount of unrecognized tax benefits:
| December 26, 2018 |  | December 27, 2017
| (In thousands)
Balance, beginning of year | $ | 1,469 |  |  | $ | 1,180 |
Increases related to current-year tax positions | 941 |  |  | — |
Increases related to prior-year tax positions | 530 |  |  | 289 |
Balance, end of year | $ | 2,940 |  |  | $ | 1,469 |
There was no interest expense associated with unrecognized tax benefits for the year ended December 26, 2018 and less than $0.1 million of interest expense associated with unrecognized tax benefits for the year ended December 27, 2017. We file income tax returns in the U.S. federal jurisdictions and various state jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2015. We are currently under federal audit by the Internal Revenue Service for tax year 2016. We remain subject to examination for U.S. federal taxes for 2015, 2017 and 2018 and in the following major state jurisdictions: California (2014-2018), Florida (2015-2018) and Texas (2014-2018).

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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