INCOME TAXES

12 Months Ended

Jul. 25, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The components of the provision for income taxes are:

	2020		2019
Federal:
Current	$	(8,023)	$	7,669
Deferred	10,846		(1,149)
State:
Current	3,627		4,198
Deferred	344		(734)
	$	6,794	$	9,984

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	July 25, 2020		July 27, 2019
Deferred tax assets:
Lease liabilities	$	98,149	$	11,118
Tax credit carryforward	508		—
Compensation related costs	2,945		4,750
Pension costs	1,881		1,474
Other	752		406
Total deferred tax assets	104,235		17,748
Deferred tax liabilities:
Tax over book depreciation	23,626		13,481
Lease assets	92,021		3,302
Patronage dividend receivable	3,133		3,270
Investment in partnerships	1,076		1,034
Other	178		123
Total deferred tax liabilities	120,034		21,210
Net deferred tax liability	$	(15,799)	$	(3,462)

Deferred income tax assets (liabilities) are included in the following captions on the consolidated balance sheets at July 25, 2020 and July 27, 2019:

	2020	2019
Other assets	702	1,406
Other liabilities	(16,501)	(4,868)

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. In management’s opinion, in view of the Company’s previous, current and projected taxable income and reversal of deferred tax liabilities, such tax assets will more likely than not be fully realized. Accordingly, no valuation allowance was deemed to be required at July 25, 2020 and July 27, 2019.

The effective income tax rate differs from the statutory federal income tax rate as follows:

	2020		2019
Statutory federal income tax rate	21.0	%	21.0	%
State income taxes, net of federal tax benefit	9.9	%	9.8	%
Settlement of tax audits	—	%	(2.2)	%
Federal net operating loss carryback	(7.9)	%	—	%
Other	(1.6)	%	(0.5)	%
Effective income tax rate	21.4	%	28.1	%

Fiscal 2020 includes a $2,512 incremental benefit from a federal net operating loss carryback at a rate higher than the current statutory tax rate. In June 2019, the Company reached an agreement with the New Jersey Division of Taxation to settle an audit

of fiscal years 2011 through 2015 for all applicable entities and fiscal years 2000 through 2014 related to a settlement agreement reached in February 2015 regarding nexus of certain subsidiaries. The Company recorded an income tax benefit of $777, net of federal taxes, in fiscal 2019 related to the settlement and to reverse remaining unrecognized tax benefits and related interest and penalties in excess of the settlement.

The New Jersey Department of Treasury is currently auditing the fiscal 2016 through 2018 tax years for all applicable entities. The Company is open to examination by the remaining relevant tax authorities with varying statutes of limitations, generally ranging from three to four years.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

	2020		2019
Balance at beginning of year	$	—	$	648
Reductions based on settlement of tax audits	—		(648)
Balance at end of year	$	—	$	—

The Company recognizes interest and penalties on income taxes in income tax expense. The Company recognized a benefit of $242 in fiscal 2019 related to interest and penalties on income taxes.