Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

Schedule of provision for income taxes

The provision for income taxes consisted of the following (in thousands):

	Fiscal Year
	2019		2018		2017(1)
Income before income taxes	$	140,334	$	107,411	$	146,466
Income tax (benefit)/provision:
Current:
Federal	$	8,211	$	5,082	$	7,148
State		7,027		8,804		7,106
Total current		15,238		13,886		14,254
Deferred:
Federal		(3,695)		(4,549)		(24,570)
State		1,498		(961)		(610)
Total deferred		(2,197)		(5,510)		(25,180)
Total (benefit)/provision	$	13,041	$	8,376	$	(10,926)

(1) The Tax Act, which was enacted on December 22, 2017, made significant changes to how corporations are taxed in the U.S., the most prominent of which affecting us was to lower the U.S. corporate tax rate from 35% to 21%. In addition to the benefit of a lower rate in future years, the enactment of the Tax Act caused us to revalue our deferred tax assets and liabilities to reflect the new rate, resulting in a benefit to our fiscal 2017 income tax provision of $38.5 million.

Schedule of reconciliation between U.S. federal statutory rate and effective tax rate

	Fiscal Year
	2019		2018		2017
U.S. federal statutory rate	21.0	%	21.0	%	35.0	%
State and district income taxes, net of federal benefit	4.9		6.1		3.3
Credit for FICA taxes paid on tips	(12.8)		(16.5)		(9.4)
Other credits and incentives	(1.4)		(2.5)		(1.9)
Manufacturing deduction	—		—		(2.3)
Deferred compensation	(1.7)		0.8		(1.5)
Equity compensation	(0.2)		(1.5)		(4.5)
Impact of statutory rate change on deferred taxes	—		—		(26.3)
Other	(0.5)		0.4		0.1
Effective tax rate	9.3	%	7.8	%	(7.5)	%

Schedule of deferred tax assets and liabilities

Following are the temporary differences that created our deferred tax assets and liabilities (in thousands):

	December 31, 2019		January 1, 2019
Deferred tax assets:
Staff member benefits	$	27,059	$	22,925
Insurance reserves		14,157		15,165
Accrued rent		27,582		10,870
Deferred income		22,725		17,288
Stock-based compensation		8,794		8,628
Tax credit carryforwards		15,754		1,880
Other		1,958		1,265
Subtotal		118,029		78,021
Less: Valuation allowance		(713)		(792)
Total	$	117,316	$	77,229
Deferred tax liabilities:
Property and equipment	$	(131,120)	$	(107,513)
Prepaid expenses		(8,819)		(7,929)
Inventory		(7,713)		(6,893)
Other		(136)		(5,420)
Total	$	(147,788)	$	(127,755)
Net deferred tax liability	$	(30,472)	$	(50,526)

Schedule of reconciliation of our uncertain tax positions

A reconciliation of the beginning and ending amount of our uncertain tax positions is as follows (in thousands):

	Fiscal Year
	2019		2018		2017
Balance at beginning of year	$	830	$	843	$	829
Additions related to current period tax positions		13		104		168
Reductions related to settlements with taxing authorities and lapses of statutes of limitations		(139)		(117)		(154)
Balance at end of year	$	704	$	830	$	843