

Provision for Income Taxes
(thousands)		2021		2020		2019
Current:
Federal	$	(1,809)	$	2,783	$	5,682
State		827		1,994		2,409
Total current		(982)		4,777		8,091
Deferred:
Federal		10,169		11,397		11,563
State		685		76		954
Total deferred		10,854		11,473		12,517
Total provision	$	9,872	$	16,250	$	20,608



Income Tax Rate Reconciliation	2021		2020		2019
Expected U.S. federal income taxes at statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal tax benefit	2.9		1.9		2.8
Tax settlements and adjustments ^(a)	(1.1)		—		(1.9)
Other	(0.5)		(1.0)		(1.4)
Effective tax rate	22.3	%	21.9	%	20.5	%

(a)For 2021, adjustments reflect benefit due to differences in statutory tax rates from loss years to years in which net operating losses may be carried back. For 2019, settlements reflect benefit from Internal Revenue Service’s examination of our 2016 and 2017 tax returns.



Net Deferred Tax Asset/(Liability)
(thousands)		March 27, 2021		March 28, 2020
Gross deferred tax assets:
Lease liabilities	$	186,168	$	169,366
Insurance reserves		11,441		10,192
Other		15,282		14,765
Total gross deferred tax assets		212,891		194,323
Gross deferred tax liabilities:
Leased assets		(148,496)		(131,484)
Goodwill		(56,623)		(47,204)
Property and equipment		(21,032)		(18,232)
Other		(910)		(1,288)
Total deferred tax liabilities		(227,061)		(198,208)
Total net deferred tax liability	$	(14,170)	$	(3,885)

We have $7.5 million of state net operating loss carryforwards and $3.5 million of federal net operating loss carrybacks available as of March 27, 2021. The state net operating loss carryforwards expire in varying amounts through 2041. The federal net operating loss may be carried back to 2016, as permitted under the CARES Act.

We evaluate the realizability of our deferred tax assets on a quarterly basis and establish valuation allowances when it is more likely than not that all or a portion of a deferred tax asset may not be realized. As of March 27, 2021, we concluded, based on the weight of all available positive and negative evidence, that all of our deferred tax assets are more likely than not to be realized.



Changes in Liability for Unrecognized Tax Benefits
(thousands)		2021		2020		2019
Balance at beginning of period	$	5,212	$	6,424	$	6,209
Additions based on tax positions related to the current year		915		644		1,178
Additions for tax positions of prior years		—		—		166
Reductions for tax positions of prior years		—		(30)		(6)
Settlements		—		—		—
Lapse in statutes of limitation		(1,092)		(1,826)		(1,123)
Balance at end of period	$	5,035	$	5,212	$	6,424

The total amount of unrecognized tax benefits was $5.0 million, $5.2 million and $6.4 million at March 27, 2021, March 28, 2020 and March 30, 2019, respectively, the majority of which, if recognized, would affect the effective tax rate.

In the normal course of business, Monro provides for uncertain tax positions and the related interest and penalties, and adjusts its unrecognized tax benefits and accrued interest and penalties and, accordingly, we had approximately $0.2 million and $0.3 million of interest and penalties associated with uncertain tax benefits accrued as of March 27, 2021 and March 28, 2020, respectively.

We file U.S. federal income tax returns and income tax returns in various state jurisdictions. Monro’s fiscal 2020, 2019 and 2018 U.S. federal tax year and various state tax years remain subject to income tax examinations by tax authorities.