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Income Taxes
9 Months Ended
Oct. 02, 2016
Income Tax Disclosure [Abstract]  
Income Taxes

Note 4 – Income Taxes

Prior to the reorganization transactions discussed in Note 1 above, J. Alexander’s Holdings, LLC was responsible for minimal state and local taxes as a result of its partnership tax status treatment.  However, effective as of September, 28, 2015, the portion of J. Alexander’s Holdings, LLC’s income allocable to J. Alexander’s Holdings, Inc. is subject to U.S. federal, state and local income taxes and is taxed at the prevailing corporate tax rates.

The net effective tax rate for the quarters ended October 2, 2016 and September 27, 2015 was 11.4% and (2.6)%, respectively, and for the nine-month periods ended October 2, 2016 and September 27, 2015 was 21.9% and (1.5)%, respectively. The net effective tax rate for the quarter and nine-month period ended September 27, 2015 was lower due to minimal state and local taxes incurred at the J. Alexander’s Holdings, LLC level while the net effective tax rate for the quarter and nine-month period ended October 2, 2016 reflects the fact that J. Alexander’s Holdings, Inc. is now responsible for the federal and state income taxes relative to the allocable share of income of J. Alexander’s Holdings, Inc. and its subsidiaries.  The factors that cause the net effective tax rate to vary from the federal statutory rate of 35% for the quarter and nine-month period ended October 2, 2016 include the impact of the Federal Insurance Contribution Act (“FICA”) tip and other credits, partially offset by state income taxes and certain non-deductible expenses.

In accordance with the operating agreement of J. Alexander’s Holdings, LLC, the members of the entity are entitled to periodic tax distributions. During the second quarter of 2016, J. Alexander’s Holdings, Inc. finalized and filed the tax returns for the short tax period ended September 28, 2015, which was required due to the reorganization transactions that occurred on that date in relation to the Spin-off and which returns included the pre-Spin-off members.  As such, J. Alexander’s Holdings, Inc. determined the amount to be distributed to the former members, and recorded a tax distribution payable of $1,319 as a reduction to equity in the second quarter of 2016.  This liability was paid in the third quarter of 2016.  Due to the current ownership structure, no additional significant tax distributions to former or current members of J. Alexander’s Holdings, LLC are anticipated to occur, other than to cover actual tax liabilities of the holders of the Class B Units or of the sole managing member, J. Alexander’s Holdings, Inc., which will be reflected in the consolidated tax provision calculations.