Income Taxes

3 Months Ended

Mar. 31, 2020

Income Taxes

Income Taxes

(5) Income Taxes

A reconciliation of the statutory federal income tax rate to our effective tax rate for the 13 weeks ended March 31, 2020 and March 26, 2019 is as follows:

	13 Weeks Ended
	March 31, 2020		March 26, 2019
Tax at statutory federal rate	21.0	%	21.0	%
State and local tax, net of federal benefit	3.8		3.6
FICA tip tax credit	(33.1)		(9.4)
Work opportunity tax credit	(4.4)		(1.4)
Stock compensation	(0.8)		(0.5)
Net income attributable to noncontrolling interests	(1.2)		(0.5)
Officers compensation	0.3		1.4
Other	1.7		0.7
Total	(12.7)	%	14.9	%

For the 13 week period ended March 31, 2020, we recognized income tax expense using a discrete tax calculation as we were unable to reliably estimate our full year effective income tax rate. This was primarily due to the inability to estimate the increased impact of the FICA tip and Work opportunity tax credits on our effective tax rate as result of the significant decrease in pre-tax income. This resulted in an effective tax rate of (12.7%). For the 13 week period ended March 26, 2019, we recognized income tax expense using an estimated annual effective tax rate. This resulted in an effective tax rate of 14.9%.

The effective rate decreased to (12.7%) in Q1 2020 primarily due to the significant decrease in pre-tax income. As a result, the impact of our FICA tip and Work opportunity tax credits had a more significant impact to our effective tax rate. Additionally, these credits exceeded our federal tax liability in Q1 2020 but we expect to utilize these credits in the current year or by carrying back to our 2019 tax year.