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Income Taxes | 12 Months Ended
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Jan. 01, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Income tax expense consisted of the following (in thousands):
| 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | 17,019 |  |  | $ | 29,762 |  |  | $ | 12,299 |
State | 4,568 |  |  | 6,528 |  |  | 3,293 |
| 21,587 |  |  | 36,290 |  |  | 15,592 |
Deferred: |  |  |  |  |
Federal | 10,954 |  |  | 584 |  |  | 2,591 |
State | 1,004 |  |  | (91) |  |  | 480 |
| 11,958 |  |  | 493 |  |  | 3,071 |
Income tax expense | $ | 33,545 |  |  | $ | 36,783 |  |  | $ | 18,663 |
The following table provides a reconciliation between the statutory federal income tax rate and our effective income tax rate:
| 2021 |  | 2020 |  | 2019
Statutory federal income tax | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State income taxes, net of federal benefit | 3.0 |  |  | 2.4 |  |  | 3.6 |
Stock-based compensation | (6.3) |  |  | (2.4) |  |  | (4.3) |
R&D tax credits | (1.4) |  |  | (1.4) |  |  | (2.2) |
Non-deductible compensation | 1.5 |  |  | 1.0 |  |  | — |
Changes in unrecognized tax benefits | (0.1) |  |  | 0.3 |  |  | (0.5) |
Other | 0.2 |  |  | — |  |  | 1.0 |
Effective income tax rate | 17.9 | % |  | 20.9 | % |  | 18.6 | %
We file income tax returns with the U.S. federal government and various state jurisdictions. In the normal course of business, we are subject to examination by federal and state taxing authorities. We are no longer subject to federal income tax examinations for years prior to 2018 or state income tax examinations prior to 2017. Deferred Income Taxes The tax effects of temporary differences that give rise to deferred income taxes were as follows (in thousands):
| 2021 |  | 2020
Deferred tax assets: |  |  |
Stock-based compensation | $ | 8,037 |  |  | $ | 7,518 |
Operating lease liabilities | 102,292 |  |  | 86,692 |
Warranty and returns liabilities | 7,459 |  |  | 8,496 |
Net operating loss carryforwards and credits | 1,939 |  |  | 2,027 |
Compensation and benefits | 8,206 |  |  | 6,045 |
Other | 6,607 |  |  | 7,440 |
Total gross deferred tax assets | 134,540 |  |  | 118,218 |
Valuation allowance | (615) |  |  | (615) |
Total gross deferred tax assets after valuation allowance | 133,925 |  |  | 117,603 |
Deferred tax liabilities: |  |  |
Property and equipment | 34,655 |  |  | 31,881 |
Operating lease right-of-use assets | 92,778 |  |  | 78,824 |
Deferred revenue | 5,460 |  |  | 4,987 |
Other | 1,720 |  |  | 2,153 |
Total gross deferred tax liabilities | 134,613 |  |  | 117,845 |
Net deferred tax liabilities | $ | (688) |  |  | $ | (242) |
At January 1, 2022, we had net operating loss carryforwards for federal purposes of $0.5 million, which will expire between 2025 and 2027. We evaluate our deferred income taxes quarterly to determine if valuation allowances are required. As part of this evaluation, we assess whether valuation allowances should be established for any deferred tax assets that are not considered more likely than not to be realized, using all available evidence, both positive and negative. This assessment considers, among other matters, the nature, frequency, and severity of historical losses, forecasts of future profitability, taxable income in available carryback periods and tax planning strategies. In making such judgments, significant weight is given to evidence that can be objectively verified. We have provided a $0.6 million valuation allowance resulting primarily from our inability to utilize certain foreign net operating losses, and federal net operating losses associated with our 2015 acquisition of BAM Labs, Inc. Unrecognized Tax Benefits Reconciliations of the beginning and ending amounts of unrecognized tax benefits were as follows (in thousands):
| Federal and State Tax
| 2021 |  | 2020 |  | 2019
Beginning balance | $ | 3,912 |  |  | $ | 3,337 |  |  | $ | 3,866 |
Increases related to current-year tax positions | 831 |  |  | 860 |  |  | 638 |
Increases related to prior-year tax positions | 4 |  |  | 27 |  |  | 134 |
Decreases related to prior-year tax positions | (33) |  |  | — |  |  | (363) |
Lapse of statute of limitations | (845) |  |  | (312) |  |  | (663) |
Settlements with taxing authorities | — |  |  | — |  |  | (275) |
Ending balance | $ | 3,869 |  |  | $ | 3,912 |  |  | $ | 3,337 |
At both January 1, 2022 and January 2, 2021, we had $3.7 million and $3.6 million, respectively, of unrecognized tax benefits, which if recognized, would affect our effective tax rate. The amount of unrecognized tax benefits is not expected to change materially within the next 12 months.

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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 http://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 http://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 http://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 http://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 http://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 http://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 http://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 http://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 http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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