Income Taxes

3 Months Ended

Apr. 03, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The effective tax rates for the three months ended April 3, 2022 and April 4, 2021 differ from the statutory tax rates due to state income taxes, permanent tax differences, and changes in our deferred tax asset valuation allowance. The tax rate in any quarter can be affected positively or negatively by adjustments that are required to be reported in the specific quarter of resolution. The effective income tax rate for the three months ended April 3, 2022 was 1.2%, compared to 17.2% for the three months ended April 4, 2021. The income tax benefit rate applied to our pre-tax loss was lower for the three months ended April 3, 2022 and April 4, 2021 than our statutory tax rate of 21% primarily due to a deferred tax asset valuation allowances.

Management regularly evaluates the future realization of deferred tax assets and provides a valuation allowance, if considered necessary, based on such evaluation. As part of the evaluation, management has evaluated taxable income in carryback years, future reversals of taxable temporary differences, feasible tax planning strategies, and future expectations of income. Based upon this analysis, a valuation allowance of $12,918 was recorded as of April 3, 2022 to reduce our net deferred tax assets to the amount that is more likely than not to be realized. The valuation allowance at January 2, 2022 was $9,819.

No liability has been recorded for uncertain tax positions. We would accrue, if applicable, income tax related interest and penalties in income tax expense in our condensed consolidated statement of operations. There were no interest and penalties incurred during the three months ended April 3, 2022 and April 4, 2021.