On December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act, among other changes, reduces the U.S. federal corporate tax rate from 35% to 21% as of January 1, 2018 (25.3% applicable for fiscal year 2018 or 21.0% applicable for fiscal year 2019 and after), limits the deductibility of interest, changes the rules on utilization and carryover of net operating losses, limits the deductibility of officers’ compensation, allows for expensing of certain qualified fixed assets, and implements a modified territorial tax system that includes other U.S. international tax provisions.

The Company has re-measured the U.S. deferred tax assets and liabilities based on the enacted tax rates which will be in effect when these differences reverse, which is estimated to be either the blended tax rate of 25.3% for fiscal year 2018 or 21.0% for after fiscal year 2019 or after. The Company has completed its assessment and reflected the income tax effects of the Act on the Company’s financial statements.

	Fiscal Years Ended August 31,
	2020			2019		2018
	(amounts in thousands)
US	$	(16,184	)	$	1,524	$	1,747
Total	$	(16,184	)	$	1,524	$	1,747

	Fiscal Years Ended August 31,
	2020		2019			2018
	(amounts in thousands)
Current:
Federal	$	—	$	—		$	—
State		53		129			65
Total current		53		129			65
Deferred:
Federal		1,047		(47	)		(146	)
State		74		(14	)		86
Total deferred		1,121		(61	)		(60	)
Total	$	1,174	$	68		$	5

The Company had an effective tax rate of (7.3)%, 4.5%, and 0.3% for the fiscal years ended August 31, 2020, August 31, 2019, and August 31, 2018 respectively. The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate was as follows:

	Fiscal Years Ended August 31,
	2020			2019			2018
Tax at federal statutory rate		21.0	%		21.0	%		25.3	%
Employer tip credit		0.9			(20.2	)		(23.5	)
Stock-based compensation		(0.8	)		—			—
Change in valuation allowance		(28.3	)		—			—
Other items		0.5			(2.2	)		(7.8	)
State tax, net of federal benefit		(0.6	)		5.9			6.3
Effective tax rate		(7.3	)%		4.5	%		0.3	%

The Company recorded an income tax provision of approximately $1.2 million and $0.1 million for the fiscal years ended August 31, 2020 and August 31, 2019, respectively. The income tax provision was immaterial for the fiscal year ended August 31, 2018. The primary difference between the effective tax rate and the federal statutory tax rate relates to the recognition of valuation allowance against deferred tax assets, employer tip credits, and non-deductible stock-based compensation.

The deferred income taxes reflect the tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes.

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities are as follows:

	As of August 31,
	2020			2019
	(amounts in thousands)
Deferred tax assets:
General business credit	$	6,472		$	1,789
NOL carryover		2,003			792
Lease liabilities		16,635			—
Deferred rent		—			602
Tenant allowance		—			324
State tax deduction		12			29
Other		535			14
Gross deferred tax assets		25,657			3,550
Deferred tax liabilities:
Basis difference on fixed assets		(4,593	)		(2,408	)
Right-of-use assets		(15,496	)		(15	)
Gross deferred tax liabilities		(20,089	)		(2,423	)
Valuation allowance		(5,568	)		—
Net deferred tax	$	—		$	1,127

As of August 31, 2020, the Company has U.S. federal net operating loss (“NOL”) carryover of approximately $27.0 million and federal tax credit carryover of approximately $2.0 million. If not utilized, $22.8 million of the federal NOL can be carried forward indefinitely, and the remainder will begin to expire in the fiscal year ending August 31, 2032. The federal tax credit will begin to expire in the fiscal year ending August 31, 2032. Utilization of the Company’s NOL and federal tax credit carryover may be subject to a substantial annual limitation due to ownership change limitations that may have occurred or that could occur in the future, as required by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended.

The Company has not recorded any unrecognized tax benefits as of August 31, 2020. Tax benefits of uncertain tax positions are recognized only if it is more likely than not that the Company will be able to sustain a position taken on an income tax return. The Company has no liability for uncertain positions. Interest and penalties, if any, related to unrecognized tax benefits would be recognized as income tax expense.

The Company evaluates the realizability of its deferred tax assets on a quarterly basis and establish valuation allowance when it is more likely than not that all or a portion of a deferred tax asset may not be realized. During the fiscal year ended August 31, 2020, the adverse effects of the COVID-19 pandemic have caused the Company to reassess the need for valuation allowances against deferred tax assets. As a result, the Company determined that it is no longer more likely than not that it will generate sufficient future U.S. taxable income to realize its deferred tax assets and, therefore, recorded valuation allowances against the net deferred tax assets. The total amount of the valuation allowances recorded was approximately $5.6 million.