XML 105 R18.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Income Taxes
 12 Months Ended
Dec. 28, 2019
Income Taxes
K.
Income
Taxes
Significant components of the provision for income taxes are as follows:
                         
 
2019
 
 
2018
 
 
2017
 
 
(in thousands)
 
Current:
 
 
 
  
 
 
  
 
 
Federal
  $
  18,510
    $
4,471
    $
34,255
 
State
   
8,084
     
4,894
     
5,225
 
                         
Total current
   
26,594
     
9,365
     
39,480
 
Deferred:
 
 
 
    
 
  
 
 
Federal
   
8,081
     
12,860
     
(22,489
 )
State
   
(346
 )    
1,398
     
102
 
                         
Total deferred
   
7,735
     
14,258
     
(22,387
 )
                         
Total provision for income taxes
  $
34,329
    $
23,623
    $
17,093
 
                         
 
 
 
 
 
The Company’s reconciliations to statutory rates are as follows:
                         
 
2019
 
  
2018
 
  
2017
 
Statutory rate
   
21.0
 %    
21.0
 %    
35.0
 %
State income taxes, net of federal benefit
   
4.6
     
4.6
     
3.6
 
Deduction relating to U.S. production activities
   
—  
      
—  
      
(3.2
 )
Deduction relating to excess stock based compensation
   
(3.2
 )    
(3.6
 )    
(3.7
 )
Change relating to enacted Tax Cuts and Jobs Act
   
—  
      
—  
      
(17.5
 )
Non-deductable
meals & entertainment
    
0.7
     
1.1
     
0.9
 
Accounting method changes
   
—  
      
(3.9
 )    
—  
  
Change in valuation allowance
   
0.4
     
0.7
     
—  
  
Other
   
0.3
     
0.4
     
(0.4
 )
                         
   
23.8
 %    
20.3
 %    
14.7
 %
                         
 
 
 
 
 
 
 
 
 
 
Due to a change of tax accounting methods for depreciation of certain property, plant and equipment for the
fiscal
year
-
ended December 30, 2017, the Company experienced a
one-time
income tax benefit of $
4.5
 million for the tax year ended December 29, 2018.
Significant components of the Company’s defer
r
ed tax assets and liabilities are as follows at:
 
  
December 28,
 
  
December 29,
 
 
2019
 
  
2018
 
 
(in thousands)
 
Deferred tax assets:
 
 
 
  
 
 
Lease Liabilities
  $
15,567
     $
—
 
Inventory
   
5,868
      
1,356
  
Stock-based compensation expense
   
5,818
      
5,156
  
Accrued expenses
   
3,232
      
1,913
  
Other
   
1,914
      
2,478
  
                 
Total deferred tax assets
   
32,399
      
10,903
  
Valuation allowance
   
(1,866
 )    
(1,291
 )
                 
Total deferred tax assets net of valuation allowance
   
30,533
      
9,612
  
Deferred tax liabilities:
 
 
 
  
 
 
Property, plant and equipment
   
(78,232
 )    
(57,099
 )
Right-of-use Assets
   
(14,203
 )    
—
  
Amortization
 
 
(10,899
)
 
 
 
(733
)
 
Prepaid expenses
   
(2,209
 )    
(949
 )
                 
Total deferred tax liabilities
   
(105,543
 )    
(58,781
 )
                 
Net deferred tax liabilities
  $
(75,010
 )   $
(49,169
 )
                 
 
The Company’s practice is to classify interest and penalties related to income tax matters in income tax expense. Interest and penalties included in the provision for income taxes amounted to $
0.0
 million, $
0.1
 million, and $
0.0
 million for fiscal years 2019, 2018, and 2017, respectively. Accrued interest and penalties amounted to $0.1 million and $0.1 million at December 28, 2019 and December 29, 2018, respectively.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
                 
 
2019
 
  
2018
 
 
(in thousands)
 
Balance at beginning of year
  $
836
    $
292
 
Increases related to current year tax positions
   
101
     
8
 
(Decreases) Increases related to prior year tax positions
   
(63
 )    
636
 
Decreases related to settlements
   
—  
      
(100
 )
Decreases related to lapse of statute of limitations
   
(63
 )    
—  
  
                 
Balance at end of year
  $
 
811
    $
836
 
                 
 
 
 
 
 
 
 
 
 
 
Included in the balance of unrecognized tax benefits at December 28, 2019 and December 29, 2018 are potential net benefits of $
0.8
 million and $
0.8
 million, respectively, that would favorably impact the effective tax rate if recognized. Unrecognized tax benefits are included in accrued expenses in the accompanying consolidated balance sheets and adjusted in the period in which new information about a tax position becomes available or the final outcome differs from the amount recorded.
In September 2017, the Internal Revenue Service (“IRS”) commenced an examination of the Company’s 2015 consolidated corporate income tax return. The examination was completed in July 2018 resulting in a no change report. As of December 28, 2019, the Company’s 2016, 2017, and 2018 federal income tax returns remain subject to examination by IRS. The Company’s state income tax returns remain subject to examination for three 
or four years depending on the state’s statute of limitations. The Company is not currently under any income tax audits as of December 28, 2019. In addition, the Company is generally obligated to report changes in taxable income arising from federal income tax audits.
It is reasonably possible that the Company’s unrecognized tax benefits may increase or decrease in 2020 if there are changes as a result of potential income tax audits; however, the Company cannot estimate the range of such possible changes. The Company does not expect that any potential changes would have a material impact on the Company’s financial position, results of operations or cash flows.
As of December 28, 2019, the Company’s deferred tax assets included a capital loss carryforward totaling $
1.7
 million. If unused, the capital loss carryforward will expire in fiscal year
2021
.