

	For the Fiscal Years Ended
	August 29,		August 31,		September 1,
	2020		2019		2018
Current:
Federal	$	59,574	$	66,161	$	85,205
State and local		14,564		16,239		16,108
		74,138		82,400		101,313
Deferred:
Federal		7,263		10,622		(27,372)
State and local		1,091		1,310		3,025
		8,354		11,932		(24,347)
Total	$	82,492	$	94,332	$	76,966


	August 29,		August 31,
	2020		2019
Deferred tax liabilities:
Depreciation	$	(41,049)	$	(40,602)
Deferred catalog costs		—		(546)
Right of use asset		(14,260)		—
Goodwill		(96,303)		(86,707)
Intangible amortization		(1,478)		(143)
		(153,090)		(127,998)
Deferred tax assets:
Accounts receivable		4,109		3,823
Lease liability		14,231		—
Inventory		8,430		6,529
Deferred compensation		753		853
Stock-based compensation		6,224		5,887
Foreign Tax Credit		2,159		2,712
Less: Valuation Allowance		(1,403)		(1,762)
Other accrued expenses/reserves		8,440		8,164
		42,943		26,206
Net Deferred Tax Liabilities	$	(110,147)	$	(101,792)

Reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:



	For the Fiscal Years Ended
	August 29,		August 31,		September 1,
	2020		2019		2018
U.S. Federal statutory rate	21.0	%	21.0	%	25.6	%
State income taxes, net of Federal benefit	3.7		3.7		3.4
Revaluation of Net Deferred Tax Liabilities	—		—		(10.0)
Other, net	—		(0.1)		(0.1)
Effective income tax rate	24.7	%	24.6	%	18.9	%

The aggregate changes in the balance of gross unrecognized tax benefits during fiscal years 2020 and 2019 were as follows:



	August 29,		August 31,
	2020		2019
Beginning Balance	$	13,297	$	11,943
Additions for tax positions relating to current year		1,682		2,203
Additions for tax positions relating to prior years		29		2,201
Reductions for tax positions relating to prior years		(25)		(409)
Settlements		(956)		(1,371)
Lapse of statute of limitations		(1,465)		(1,270)
Ending Balance	$	12,562	$	13,297

Included in the balance of unrecognized tax benefits at August 29, 2020 is $1,311 related to tax positions for which it is reasonably possible that the total amounts could significantly change during the next 12 months. This amount represents a decrease in unrecognized tax benefits comprised primarily of items related to expiring statutes of limitations in state jurisdictions.

The Company recognizes interest expense and penalties in the provision for income taxes. The fiscal years 2020, 2019 and 2018 provisions include interest and penalties of $23, $27 and $44, respectively. The Company has accrued $585 and $521 for interest and penalties as of August 29, 2020 and August 31, 2019, respectively.

The Company has a foreign tax credit carryover of $2,159 of which a valuation allowance of $1,403 has been provided. This foreign tax credit carryover expires beginning fiscal year 2024.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into legislation which includes business tax provisions that will impact taxes related to 2018, 2019 and 2020. The Company has analyzed the various provisions under the CARES Act and as of August 29, 2020 there is no significant impact to be recorded.

On December 22, 2017, the TCJA was enacted. The TCJA made significant changes to U.S. federal income tax laws including permanently lowering the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. As the Company has a fiscal August year-end, the lower corporate income tax rate was phased in, resulting in a U.S. statutory rate of 25.6% for the fiscal year ending September 1, 2018. The Company’s statutory federal tax rate is 21.0% for fiscal years 2019 and beyond. U.S. GAAP required that the impact of tax legislation be recognized in the period in which the law was enacted.

In December 2017, the SEC issued Staff Accounting Bulletin No. 118, which allowed a company to report provisional numbers related to the TCJA and adjust those amounts during a measurement period not to extend beyond one year. The Company recorded a net tax benefit of $40,464 due to the revaluation of its net deferred tax liabilities primarily related to the lower federal corporate tax rate, partially offset by the lower federal benefit for state taxes and the change from a worldwide tax system to a territorial tax system in fiscal year 2018. The amounts recorded are provisional and are subject to change due to further interpretations of the TCJA, legislative action to address questions that arise because of the TCJA, and/or any updates or changes to estimates the Company has utilized to calculate the impacts, such as return to accrual adjustments and/or changes to current year earnings estimates and the Company’s ongoing analysis of the TCJA.