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Income Taxes
 12 Months Ended
Jan. 01, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of income before provision for income taxes are as follows (in thousands):
Year EndedYear EndedYear Ended
January 1,
2022
(52 weeks)
January 2,
2021
(53 weeks)
December 28,
2019
(52 weeks)
Income before provision for income taxes:
U.S.$43,511 $26,054 $20,778 
Foreign10,764 7,568 6,019 
Total$54,275 $33,622 $26,797 
The provision (benefit) for income taxes consists of the following (in thousands):
Year EndedYear EndedYear Ended
January 1,
2022
(52 weeks)
January 2,
2021
(53 weeks)
December 28,
2019
(52 weeks)
Currently payable:
Federal$7,072 $4,039 $4,252 
Foreign2,517 1,335 1,119 
State2,561 2,627 1,838 
Total current expense12,150 8,001 7,209 
Deferred:
Federal(92)1,170 (869)
Foreign230 309 331 
State308 (365)(621)
Total deferred expense (benefit)446 1,114 (1,159)
Total tax expense$12,596 $9,115 $6,050 
A reconciliation of CRA's tax rates with the federal statutory rate is as follows:
Fiscal YearFiscal YearFiscal Year
202120202019
Federal statutory rate21.0 %21.0 %21.0 %
State income taxes, net of federal income tax benefit5.3 5.8 5.5 
Tax law changes0.4 0.2 — 
Share-based compensation(5.0)(1.8)(5.0)
Meals & Entertainment Expense0.1 0.2 1.7 
Executive Compensation1.3 1.6 1.6 
Uncertain tax positions(0.3)(0.1)(2.5)
Other0.4 0.2 0.3 
Annual effective tax rate23.2 %27.1 %22.6 %
The components of CRA's deferred tax assets (liabilities) are as follows (in thousands):
January 1,
2022		January 2,
2021
Deferred tax assets:
Accrued compensation and related expense$15,047 $15,453 
Allowance for doubtful accounts1,375 1,535 
Net operating loss carryforwards281 194 
Lease liabilities34,523 38,146 
Foreign exchange and other76 79 
Total gross deferred tax assets51,302 55,407 
Less: valuation allowance(308)— 
Total deferred tax assets, net of valuation allowance50,994 55,407 
Deferred tax liabilities:
Goodwill and other intangible asset amortization4,262 3,523 
Right-of-Use assets27,710 30,761 
Property and equipment9,788 11,595 
Prepaids and other944 586 
Total deferred tax liabilities42,704 46,465 
Net deferred tax assets$8,290 $8,942 
At January 1, 2022, CRA had U.S. local and foreign net operating losses of $1.5 million with lives ranging from 20 years to indefinite.
The aggregate changes in the balances of gross unrecognized tax benefits were as follows (in thousands):
Fiscal YearFiscal Year
20212020
Balance at beginning of period$203 $242 
Additions for tax positions taken during prior years— 43 
Reductions as a result of a lapse of the applicable statutes of limitations(162)(82)
Balance at end of the period$41 $203 
CRA files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. A number of years may elapse before an uncertain tax position, for which CRA has unrecognized tax benefits, is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, CRA believes that its unrecognized tax benefits reflect the most likely outcome. CRA adjusts these unrecognized tax benefits, and the associated interest, in light of changing facts and circumstances. At the end of fiscal 2021, accrued interest for uncertain tax positions and total unrecognized tax benefit were immaterial.
The number of years with open tax audits varies depending on the tax jurisdiction. CRA's major taxing jurisdiction is the United States where CRA is no longer subject to U.S. federal examinations by the Internal Revenue Service for years before fiscal 2018. Within the significant states where CRA is subject to income tax, CRA is no longer subject to examinations by state taxing authorities before fiscal 2017. CRA's United Kingdom ("U.K.") subsidiary's corporate tax returns are no longer subject to examination by Her Majesty's Revenue and Customs for years before fiscal 2020. During fiscal 2019, an examination by the German Tax Authority for fiscal years 2014-2016 commenced. CRA believes its reserves for uncertain tax positions are adequate.
During the fourth quarter of fiscal 2020, CRA considered the operating needs of the U.K. subsidiary, as well as the tax implications of no longer asserting indefinite reinvestment with respect to the U.K. operations. As a result of both a qualitative and quantitative analysis, previously taxed and untaxed post fiscal 2018 U.K. earnings were no longer considered permanently reinvested. Deferred taxes that are a consequence of foreign exchange translation resulting from earnings that are no longer
considered permanently reinvested are recorded as a component of foreign currency translation adjustments on the consolidated statements of comprehensive income. In fiscal 2021, CRA's U.S. parent entity received approximately $16.3 million in cash dividends from CRA's U.K. subsidiary. These dividends were distributed out of both previously taxed and untaxed earnings. The foreign exchange translation was previously accounted for through deferred taxes during fiscal 2020. Incremental foreign exchange translation on the actual distribution was immaterial. Deferred income taxes or foreign withholding taxes, estimated to be $0.3 million, have not been recorded for other jurisdictions as those earnings are considered to be permanently reinvested.
Effects of the CARES Act
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was signed into law, which included a retroactive, technical correction that allows 100% bonus depreciation for qualified improvement property (“QIP”). This technical correction became effective as of the enactment of the Tax Cuts and Jobs Act of 2017 (“TCJA”) and effected a $2.2 million tax receivable stemming from 2018 and 2019 leasehold improvements that previously had a thirty-nine year life.
Additionally, the CARES Act allows for employers to defer the payment of the employer share of the Social Security taxes to be paid in two installments: the first by December 31, 2021, and the remainder by December 31, 2022. Accordingly, CRA had deferred $1.3 million and $2.7 million of tax at the end of fiscal 2021 and 2020, respectively, which created book-to-tax temporary differences until paid.