Income Taxes

3 Months Ended

Mar. 27, 2021

Income Tax Disclosure [Abstract]

Income Taxes

K. Income Taxes

As of March 27, 2021 and December 26, 2020, the Company had approximately $0.8 million of unrecognized income tax benefits as of each date.

The Company’s practice is to classify interest and penalties related to income tax matters in income tax expense. As of March 27, 2021 and December 26, 2020, the Company had $0.2 million and $0.2 million, respectively, accrued for interest and penalties recorded in other liabilities.

The Internal Revenue Service completed an examination of the 2015 consolidated corporate income tax return and issued a no change report in 2018. 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 currently under two state income tax audits as of March 27, 2021.

The following table provides a summary of the income tax provision for the thirteen weeks ended March 27, 2021 and March 28, 2020:

	Thirteen weeks ended
	March 27, 2021			March 28, 2020
	(in thousands)
Summary of income tax provision
Tax provision based on net income	$	19,613		$	5,005
Benefit of ASU 2016-09		(8,615	)		(2,004	)
Total income tax provision	$	10,998		$	3,001

The benefit of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, increased by $6.6 million to $8.6 million for the thirteen weeks ended March 27, 2021 as compared to $2.0 million for the thirteen weeks ended March 28, 2020, primarily due to increases in number of shares exercised and increases in stock price.

The Company’s effective tax rate for the thirteen weeks ended March 27, 2021, excluding the impact of ASU 2016-09, increased to 25.6% from 23.6% for the thirteen weeks ended March 28, 2020, primarily due to one-time state tax benefits related to capital investments for the thirteen weeks ended March 28, 2020.