v3.22.2.2
Income Taxes
 12 Months Ended
Jul. 29, 2022
Income Taxes [Abstract]  
Income Taxes
13. Income Taxes


The components of the provision for income taxes (income tax benefit) for each of the three years were as follows:

 
  
2022
    
2021
    
2020
  
Current:
                  
Federal
  
$
16,462
    
$
(13,505
)
  
$
(15,375
)
State
    
1,188
      
2,405
      
(2,115
)
Deferred:
                        
Federal
    
(4,543
)
    
57,580
      
(13,467
)
State
    
(1,604
)
    
9,558
      
2,274
  
Total provision for income taxes (income tax benefit)
  
$
11,503
    
$
56,038
    
$
(28,683
)


A reconciliation of the Company’s provision for income taxes (income tax benefit) and income taxes based on the statutory U.S. federal rate of 21.0% in 2022, 2021 and 2020 was as follows:

 
  
2022
    
2021
    
2020
  
Provision computed at federal statutory income tax rate
  
$
30,110
    
$
65,216
    
$
17,070
  
State and local income taxes, net of federal benefit
    
1,452
      
10,589
      
(263
)
Loss on unconsolidated subsidiary
    
—
      
—
      
(29,913
)
Federal net operating loss benefit
    
—
      
(5,402
)
    
(1,573
)
Employer tax credits for FICA taxes paid on employee tip income
    
(15,395
)
    
(12,323
)
    
(11,489
)
Other employer tax credits
    
(4,929
)
    
(3,234
)
    
(3,606
)
Tax audit settlement
     (1,939 )     —
       —
  
Other-net
    
2,204
      
1,192
      
1,091
  
Total provision for income taxes (income tax benefit)
  
$
11,503
    
$
56,038
    
$
(28,683
)


The decrease in the Company’s provision for income taxes in 2022 as compared to 2021 is primarily due to the decrease in income before income taxes and the benefit of higher income tax credits.  The increase in the Company’s provision for income taxes in 2021 as compared to 2020 is primarily due to the increase in income before income taxes.


Significant components of the Company’s net deferred tax liability consisted of the following at:

 
  
July 29, 2022
    
July 30, 2021
  
Deferred tax assets:
            
Compensation and employee benefits
  
$
7,329
    
$
12,089
  
Accrued liabilities
    
15,770
      
14,145
  
Operating lease liabilities
    
193,794
      
199,029
  
Insurance reserves
    
7,115
      
7,141
  
Inventory
    
3,002
      
2,968
  
Deferred tax credits and carryforwards
    
24,896
      
16,978
  
Other
    
13,875
      
4,507
  
Deferred tax assets
  
$
265,781
    
$
256,857
  
 
                
Deferred tax liabilities:
                
Property and equipment
  
$
101,268
    
$
99,075
  
Inventory
    
5,517
      
7,161
  
Operating lease right-of-use asset
    
232,914
      
243,553
  
Other
    
6,275
      
5,694
  
Deferred tax liabilities
    
345,974
      
355,483
  
Net deferred tax liability
  
$
80,193
    
$
98,626
  


The Company has a deferred tax asset of $15,248 reflecting federal income tax credit carryforwards that expire in 2043. The Company has state income tax net operating loss carryforwards (“NOL”) of $67,418 and has recorded a deferred tax asset of $3,811 reflecting this benefit.  These state NOLs generally expire in years beginning 2037 and after.


The Company believes that adequate amounts of tax, interest and penalties have been provided for potential tax uncertainties; these amounts are included in other long-term liabilities in the Consolidated Balance Sheets.  As of July 29, 2022 and July 30, 2021, the Company’s gross liability for uncertain tax positions, exclusive of interest and penalties, was $10,858 and $14,477, respectively.


Summarized below is a tabular reconciliation of the beginning and ending balance of the Company’s total gross liability for uncertain tax positions exclusive of interest and penalties:

 
  
July 29, 2022
    
July 30, 2021
    
July 31, 2020
  
Balance at beginning of year
  
$
14,477
    
$
17,835
    
$
18,006
  
Tax positions related to the current year:
Additions
    
1,152
      
1,596
      
1,407
  
Reductions
    
—
      
—
      
—
  
Tax positions related to the prior year:
Additions
    
17
      
—
      
202
  
Reductions
    
(1,241
)
    
(1,045
)
    
(256
)
Settlements
    
(1,942
)
    
(1,786
)
    
(138
)
Expiration of statute of limitations
    
(1,605
)
    
(2,123
)
    
(1,386
)
Balance at end of year
  
$
10,858
    
$
14,477
    
$
17,835
  


If the Company were to prevail on all uncertain tax positions, the reversal of this accrual would be a tax benefit to the Company and impact the effective tax rate.  The following table highlights the amount of uncertain tax positions, exclusive of interest and penalties, which, if recognized, would affect the effective tax rate for each of the three years:

 
  
2022
    
2021
    
2020
  
Uncertain tax positions
  
$
8,578
    
$
11,437
    
$
14,090
  


The Company had $7,133, $7,755, and $7,210 in interest and penalties accrued as of July 29, 2022, July 30, 2021, and July 31, 2020, respectively.


The Company recognized accrued interest and penalties related to unrecognized tax benefits of $(622), $545 and $913 in its provision for income taxes on July 29, 2022, July 30, 2021 and July 31, 2020, respectively.



In many cases, the Company’s uncertain tax positions are related to tax years that remain subject to examination by the relevant taxing authorities.  Based on the outcome of these examinations or as a result of the expiration of the statutes of limitations for specific taxing jurisdictions, it is reasonably possible that the related uncertain tax positions taken regarding previously filed tax returns could decrease from those recorded as liabilities for uncertain tax positions in the Company’s financial statements at July 29, 2022 by approximately $4,000 to $6,000 within the next twelve months.  At July 29, 2022, the Company was subject to income tax examinations for its U.S. federal income taxes after 2018 and for state and local income taxes generally after 2018.