v3.26.1
Income Taxes
 3 Months Ended
Apr. 04, 2026
Income Taxes  
Income Taxes

Note L – Income Taxes

 

The Company files income tax returns in the U.S. at the federal and state levels, and in foreign jurisdictions. With limited exceptions, the Company is no longer subject to U.S. federal, state, and local income tax examinations by tax authorities for years before 2021 and is no longer subject to non-U.S. income tax examinations by foreign tax authorities for years prior to 2019.

 

There have been no significant changes to the value of unrecognized tax benefits during the three months ended April 4, 2026.      

 

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (“OBBBA”), which resulted in many tax extensions and other rule changes, including the following which we believe will have an effect on our tax provision in 2026:

 

 

1.

Return of the Section 163(j) taxable income base excluding the deductions for depreciation and amortization in 2025 and 2026 (change from “Tax EBIT” to “Tax EBITDA”);

 

2.

Decrease in the Section 250 deduction for Net CFC Tested Income (formerly GILTI) to 40% (from 50%), instead of the scheduled decrease to 37.5% prior to the OBBBA;

 

3.

Decrease in the Section 250 deduction for foreign-derived income to 33.34% (from 37.5%), instead of the scheduled decrease to 21.875% prior to the OBBBA; and

 

4.

Increase in the foreign tax credit rate on Net CFC Tested Income (formerly GILTI) to 90% (from 80%), and a 10% disallowance on repatriation.

 

The Company has elected to change its method of accounting for domestic research or experimental expenditures to the deduction method on a cut-off basis under §174A(a) of the Internal Revenue Code (“IRC”), pursuant to Section 7.02(3)(a) of Rev Proc 2025-28 and will continue to amortize research and development costs capitalized between 2022 and 2024 over a 5 or 15 year period for U.S and foreign §174 costs, respectively.