Income Taxes

12 Months Ended

Dec. 26, 2020

Note 9 Income Taxes



(dollars in thousands)		2020		2019		2018
Current:
Federal	$	29,121	$	11,779	$	11,385
State		9,984		3,117		4,594
Deferred:
Federal		4,090		6,636		6,059
State		1,567		(871)		(2,640)
	$	44,762	$	20,661	$	19,398

The reconciliation of income taxes computed at the federal statutory rate of 21% in 2020, 2019 and 2018. Ending deferred tax liability has been computed at the federal statutory rate of 21%.



(dollars in thousands)		2020		2019		2018
Income taxes at federal statutory rate	$	34,373	$	18,615	$	17,249
State income taxes, net of federal income tax benefit		7,261		1,333		639
Nondeductible employee-related expenses		2,223		1,974		768
2017 tax reform		-		-		657
Other		905		(1,261)		85
Provision for income taxes (effective tax rate 27.3%, 23.3% and 23.6%, respectively)	$	44,762	$	20,661	$	19,398

The effective income tax rate was 27.3%, 23.3% and 23.6% in 2020, 2019, and 2018, respectively. The effective income tax rate differs from the federal statutory rate of 21% primarily due to state taxes as well as nondeductible employee expenses. Not all the Company’s tax credits and state deductions are driven proportionately by taxable income levels, due to these items and the significant increase in taxable income from prior years, the result was a higher effective income tax rate for 2020.

Cash paid for federal income taxes was $33.5 million, $11.3 million $4.5 million and in 2020, 2019 and 2018 respectively. Cash paid for state income taxes was $8.8 million, $2.8 million and $2.1 million in 2020, 2019 and 2018 respectively.

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Note 9 Income Taxes (continued)

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities at December 26, 2020 and December 28, 2019, are:



(dollars in thousands)		2020		2019
Deferred tax assets:
Accounts receivable	$	659	$	749
Employment incentives		6,204		4,735
Self-insurance liability		8,515		7,344
Postretirement benefit obligations		6,527		6,054
Net operating loss and credit carryforwards		7,787		9,945
Unrecognized Tax Benefits		1,751		1,389
Other		1,407		611
Total deferred tax assets		32,850		30,827
Deferred tax liabilities:
Inventories		(13,407)		(13,072)
Unrealized gains on marketable securities		(3,059)		(2,851)
Prepaids		(5,993)		(4,883)
Nondeductible accruals and other		(332)		(926)
Depreciation		(113,463)		(106,136)
Total deferred tax liabilities		(136,254)		(127,868)
Net deferred tax liability	$	(103,404)	$	(97,041)

The following table summarizes the activity related to the Company’s unrecognized tax benefits:



(dollars in thousands)		2020		2019
Unrecognized tax benefits at beginning of year	$	6,612	$	6,405
Increases based on tax positions related to the current year		1,725		1,769
Additions for tax positions of prior year		-		-
Reductions for tax positions of prior years		-		-
Settlements		-		-
Expiration of the statute of limitations for assessment of taxes		-		(1,562)
Unrecognized tax benefits at end of year	$	8,337	$	6,612

The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $1.7 million in 2020, $1.8 million in 2019 and $1.7 million in 2018.

The Company or one of its subsidiaries files tax returns in the United States and various state jurisdictions. The tax years subject to examination in the United State and in Pennsylvania, where the majority of the Company's revenues are generated, are 2016 to 2020.

The Company has net operating loss carryforwards of $72 million available for state income tax purposes. The net operating losses will begin to expire starting in 2027. The Company expects to fully utilize these net operating loss carryforwards.