5. Income taxes

Components of the provision (benefit) for income taxes are as follows:



	Fiscal Year Ended
	March 28,		March 30,		March 31,
	2020		2019		2018
Income before income taxes:
U.S.	$	12,168	$	14,397	$	3,001
Foreign		9,034		7,564		3,704
	$	21,202	$	21,961	$	6,705
Current
Federal	$	2,953	$	(780)	$	10,685
State		1,646		1,464		792
Foreign		1,968		1,160		1,345
Total current provision		6,567		1,844		12,822
Deferred
Federal		448		(1,350)		(25,418)
State		(302)		(68)		158
Foreign		2		(145)		(285)
Total deferred benefit		148		(1,563)		(25,545)
Total provision (benefit) for income taxes	$	6,715	$	281	$	(12,723)

The Tax Act made numerous changes to federal corporate tax law including but not limited to the reduction of the U.S. statutory tax rate, the imposition of limitations on the deductibility of net interest expense and certain executive compensation arrangements and the creation of a new tax on global intangible low-taxed income (“GILTI”). The Tax Cuts and Jobs Act (the “Tax Act”) was enacted on December 22, 2017.

SEC Staff Accounting Bulletin (“SAB”) 118 allowed the Company to record provisional amounts for the impact of the Tax Act during a measurement period not to extend beyond one year from the enactment date to complete the accounting under ASC 740, Income Taxes. The Company completed the accounting for the tax effects of the Tax Act in the third quarter of fiscal 2018, prior to the end of the measurement period on December 22, 2018.

Deferred tax effects

As of December 30, 2017, the Company remeasured deferred tax assets and liabilities based on the rates at which they were expected to reverse in the future, which was generally 21%, by recording a provisional benefit of $24,210. Upon further analysis of certain aspects of the Tax Act and refinement of its calculations, the Company adjusted its provisional amount by $303 of tax expense, which is included as a component of income tax provision (benefit) in the consolidated statement of operations. The final net impact related to the remeasurement of deferred tax assets and liabilities pursuant to the Tax Act is a benefit of $23,907.

One‑time transition tax on earnings of foreign subsidiaries

In the fourth quarter of fiscal 2017, the Company recorded a provisional expense of $8,521 related to the one-time transition tax on foreign earnings. Upon further analysis of certain aspects of the Tax Act and refinement of its calculations, the Company recorded a benefit of $5,903 in the third quarter of fiscal 2018, which is included as a component of income tax benefit in the consolidated statement of operations, related to the one-time transition tax on foreign earnings. The final calculated one-time transition tax on foreign earnings is $2,618 which is net of foreign tax credit utilization of $833. Additionally, the Company has $1,331 of foreign tax credits carryforwards which it does not expect to be able to utilize in future years. As such, the Company has recorded a full valuation allowance related to these credits, the effect of which is included within the net transition tax liability. As of March 28, 2020, the Company has a remaining transition tax liability of $1,420, which will be paid in installments over the next five years as elected.

Global intangible low-taxed income (“GILTI”)

The Tax Act creates a new requirement that certain global intangible low-taxed income (“GILTI”) earned by controlled foreign corporations (“CFC”) must be included currently in the taxable income of the CFC’s U.S. shareholder. The Company became subject to the GILTI provisions beginning in fiscal 2018. The Company has elected an accounting policy to recognize GILTI as a period cost when incurred.

Effective income tax rate reconciliation

The differences between the actual provision for income taxes and the amounts computed by applying the statutory federal tax rate to income before taxes are as follows:



	Fiscal Year Ended
	March 28,		March 30,		March 31,
	2020		2019		2018
Provision computed at federal statutory rate	$	4,453	$	4,612	$	2,114
Permanent differences		1,145		1,230		566
One-time transition tax, net		—		(5,903)		8,521
Change in valuation allowance		(46)		(116)		211
State income taxes, net of federal benefit		1,062		817		455
Effect of foreign income taxes		(8)		(511)		(351)
Remeasurement of deferred tax balances		—		303		(24,210)
Other, net		109		(151)		(29)
	$	6,715	$	281	$	(12,723)

Deferred taxes

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. Components of deferred tax assets and liabilities as of March 28, 2020 and March 30, 2019, are as follows:


	March 28,		March 30,
	2020		2019
Deferred tax assets:
Inventory	$	1,549	$	1,165
Loss and credit carryforwards		4,542		4,839
Stock-based compensation		5,180		5,346
Accrued liabilities		6,232		5,061
Capital assets		98,372		99
Other		171		—
		116,046		16,510

Valuation allowance		(3,479)		(3,534)
Total deferred tax assets		112,567		12,976
Deferred tax liabilities:
Intangibles		(56,674)		(57,153)
Capital assets		(103,760)		(2,904)
Other		—		(2,709)
Total deferred tax liabilities		(160,434)		(62,766)
Net deferred tax liabilities	$	(47,867)	$	(49,790)

The Company has recorded deferred tax assets and liabilities based upon estimates of their realizable value with such estimates based upon likely future tax consequences. In assessing the need for a valuation allowance, the Company considers both positive and negative evidence related to the likelihood of realization of the deferred tax assets. If, based on the weight of available evidence, it is more‑likely‑than‑not that a deferred tax asset will not be realized, the Company records a valuation allowance.

Foreign and domestic tax credits, net of valuation allowances, totaled approximately $931 at March 28, 2020 and approximately $1,190 at March 30, 2019. The various credits available at March 28, 2020 expire in the 2026 tax year.

The Company had deferred tax assets for foreign and state net operating loss carryovers of $2,279 at March 28, 2020, and approximately $2,317 at March 30, 2019. Valuation allowances of $2,135 and $2,181 were recorded against the net operating loss deferred tax assets at March 28, 2020 and March 30, 2019, respectively.

The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is currently subject to U.S. federal income tax examinations for the year ended March 31, 2018 and forward. With respect to state and local jurisdictions and countries outside of the United States, the Company and subsidiaries are typically subject to examination for three to six years after the income tax returns have been filed.

We operate in certain jurisdictions outside the United States. ASC 740‑30 provides that the undistributed earnings of a foreign subsidiary be accounted for as a temporary difference under the presumption that all undistributed earnings will be distributed to the parent company as a dividend. Sufficient evidence of the intent to permanently reinvest the earnings in the jurisdiction where earned precludes a company from recording the temporary difference. For purposes of ASC 740‑30, the Company does not consider the earnings subject to the transition tax and GILTI under the Tax Act permanently reinvested. All other earnings are considered permanently reinvested.