Income Taxes

12 Months Ended

Aug. 28, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense consisted of the following:

	2021		2020		2019
Current
Federal	$	71,579	$	14,318	$	16,433
State	16,179		2,806		3,138
Total	87,758		17,124		19,571
Deferred
Federal	737		(790)		6,395
State	(2,916)		(500)		1,145
Total	(2,179)		(1,290)		7,540
Provision for income taxes	$	85,579	$	15,834	$	27,111

A reconciliation of the U.S. statutory income tax rate to our effective income tax rate is as follows:

	2021		2020		2019
U.S. federal statutory rate	21.0	%	21.0	%	21.0	%
State taxes, net of federal benefit	3.3	%	1.9	%	2.9	%
Income tax credits	(0.6)	%	(2.5)	%	(4.5)	%
Nondeductible compensation	0.5	%	0.9	%	—	%
Tax-free and dividend income	(0.1)	%	(0.6)	%	(0.5)	%
Uncertain tax position settlements and adjustments	(0.1)	%	0.1	%	0.9	%
Other items	(0.7)	%	(0.3)	%	(0.3)	%
Effective tax provision rate	23.3	%	20.5	%	19.5	%

Our effective tax rate increased to 23.3% in Fiscal 2021 compared to 20.5% in Fiscal 2020 primarily due to relatively consistent year-over-year tax credits on higher pre-tax income in Fiscal 2021.

The tax effects of temporary differences that give rise to deferred income taxes were as follows:

	August 28, 2021		August 29, 2020
Warranty reserves	$	22,450	$	13,969
Deferred compensation	5,224		5,406
Self-insurance reserve	4,336		3,426
Stock-based compensation	4,607		2,865
Leases	8,422		8,638
Other(1)	7,170		6,191
Total deferred tax assets	52,209		40,495
Convertible notes	2,608		3,125
Intangibles	39,940		32,933
Depreciation	15,161		11,715
Leases	7,929		8,330
Total deferred tax liabilities	65,638		56,103
Total deferred income tax liabilities, net	$	13,429	$	15,608

(1)    Other includes $400 and $500 related to state net operating losses as of August 28, 2021 and August 29, 2020, respectively. These net operating losses are subject to various expiration periods from 5 years to no expiration. We have evaluated all the positive and negative evidence and consider it more likely than not that these carryforwards can be realized before expiration.

Changes in the unrecognized tax benefits are as follows:

	2021		2020		2019
Balance at beginning of year	$	5,830	$	2,822	$	1,220
Gross increases-tax positions in a prior year	—		2,486		1,173
Gross decreases-tax positions in a prior year	(872)		—		—
Gross increases-current year tax positions	579		522		429
Balance at end of year	5,537		5,830		2,822
Accrued interest and penalties	946		681		769
Total unrecognized tax benefits	$	6,483	$	6,511	$	3,591

The amount of unrecognized tax benefits is not expected to change materially within the next 12 months. If the remaining uncertain tax positions are ultimately resolved favorably, $2,600 of unrecognized tax benefits would have a favorable impact on our effective tax rate. It is our policy to recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense.

We file a U.S. Federal tax return, as well as returns in various international and state jurisdictions. Although certain years are no longer subject to examination by the Internal Revenue Service ("IRS") and various state taxing authorities, net operating loss carryforwards generated in those years may still be adjusted upon examination by the IRS or state taxing authorities. As of August 28, 2021, our federal returns from Fiscal 2018 to present are subject to review by the IRS. With limited exception, state returns from Fiscal 2017 to present continue to be subject to review by state taxing jurisdictions. Several years may lapse before an uncertain tax position is audited and finally resolved and it is difficult to predict the outcome of such audits.