Income Taxes

12 Months Ended

Oct. 02, 2022

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income taxes consist of the following in each fiscal year (in thousands):

	2022		2021		2020
Current:
Federal	$	28,934	$	36,051	$	19,721
State	9,320		11,793		7,844
	38,254		47,844		27,565
Deferred:
Federal	5,344		4,440		4,625
State	2,513		3,568		537
	7,857		8,008		5,162
Income tax expense from continuing operations	$	46,111	$	55,852	$	32,727
Income tax expense from discontinued operations	$	—	$	—	$	144

A reconciliation of the federal statutory income tax rate to our effective tax rate for continuing operations is as follows:

	2022		2021		2020
Income tax expense at federal statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	5.2	%	5.1	%	5.3	%
Stock compensation tax deficiency (excess tax benefit)	0.1	%	(0.5)	%	(0.4)	%
Benefit of jobs tax credits, net of valuation allowance	(0.6)	%	(0.1)	%	(0.5)	%
Adjustment to state tax provision	—	%	0.7	%	—	%
Nondeductible transaction costs	0.6	%	—	%	—	%
Expense (benefit) related to COLIs	2.1	%	(1.5)	%	(0.9)	%
Officers’ compensation limitation	0.4	%	0.5	%	2.2	%
Other, net	(0.3)	%	—	%	0.1	%
	28.5	%	25.2	%	26.8	%

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at each fiscal year-end are presented below (in thousands):

	2022		2021
Deferred tax assets:
Operating and finance lease liabilities	$	340,317	$	237,509
Accrued defined benefit pension and postretirement benefits	19,090		28,837
Accrued legal settlements	15,158		2,378
Deferred income	13,524		12,083
Accrued insurance	8,339		5,389
Share-based compensation	5,094		4,039
Tax loss and tax credit carryforwards	4,399		3,129
Accrued incentive compensation	2,402		3,455
Other reserves and allowances	1,627		1,672
Accrued compensation expense	1,329		710
Property and equipment, net of impairment	—		5,922
Other, net	2,319		3,424
Total gross deferred tax assets	413,598		308,547
Valuation allowance	(1,140)		(1,349)
Total net deferred tax assets	412,458		307,198
Deferred tax liabilities:
Operating and finance lease ROU assets	(349,903)		(242,038)
Intangible assets	(87,165)		(11,349)
Property and equipment, principally due to differences in depreciation	(5,656)		—
Investment basis limitation	(6,010)		—
Other	(1,408)		(2,294)
Total gross deferred tax liabilities	(450,142)		(255,681)
Net deferred tax (liabilities) assets	$	(37,684)	$	51,517

Deferred tax assets as of October 2, 2022 include federal and state gross net operating loss carryforwards of approximately $24.6 million, of which $19.2 million has an indefinite carryforward. The remainder will expire at various times between 2023 and 2042. At October 2, 2022, we recorded a valuation allowance of $1.1 million related to state tax credits, which decreased from the $1.3 million at October 3, 2021 due to the release of the valuation allowance on California Enterprise Zone Credits. We believe it is more likely than not that these credit carryforwards will not be realized and that all other deferred tax assets will be realized through future taxable income or alternative tax strategies.

The major jurisdictions in which the Company files income tax returns includes the United States and states in which we operate that impose an income tax. The federal statutes of limitations have not expired for fiscal year 2019 and forward. The statutes of limitations for California and Texas, which constitutes the Company's major state tax jurisdictions, have not expired for fiscal years 2018 and forward.