Income Taxes

3 Months Ended

Apr. 02, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense was $1.8 million for the first quarter of 2023 and income tax benefit was $13.0 million for the first quarter of 2022. The quarterly amounts are impacted by changes in earnings from operations. The first quarter 2022 amounts were also impacted by changes in the fair value of the Company's investment in Persol Holdings, which resulted in a benefit of $18.4 million.

Our tax expense is affected by recurring items, such as the amount of pretax income and its mix by jurisdiction, U.S. work opportunity credits and the change in cash surrender value of tax-exempt investments in life insurance policies. It is also affected by discrete items that may occur in any given period but are not consistent from period to period, such as tax law changes, changes in judgment regarding the realizability of deferred tax assets, the tax effects of stock compensation and, prior to February 2022, changes in the fair value of the Company's investment in Persol Holdings, which were treated as discrete since they could not be estimated.

The Company provides valuation allowances against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. Sustained profitability of our German business makes release of its $5.7 million valuation allowance possible in the near term.