Income Taxes

12 Months Ended

Mar. 28, 2020

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act makes broad and complex changes to the U.S. tax code that affect the Company and include, but are not limited to: (1) reducing the U.S. federal corporate tax rate, (2) allowing bonus depreciation for full expensing of qualified property and (3) eliminating the manufacturing deduction. The Tax Act reduces the federal corporate tax rate to 21%. As a result of these changes, the Company's statutory tax rate for the fiscal year ended March 31, 2018 was 31.54%, reflecting a 35% tax rate that was applicable prior to the passage of the Tax Act and the new 21% rate that was effective after passage of the Tax Act.

The provision for income taxes generally represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. The provision for income taxes for fiscal years 2020, 2019 and 2018 were as follows (in thousands):



	Fiscal Year
	2020			2019			2018
Current
Federal	$	14,625		$	16,086		$	19,008
State	3,084			2,209			2,323
Total current	17,709			18,295			21,331
Deferred
Federal	246			(347		)	(4,315		)
State	(42		)	106			5
Total deferred	204			(241		)	(4,310		)
Total income tax provision	$	17,913		$	18,054		$	17,021

A reconciliation of income taxes computed by applying the expected federal statutory income tax rates of 21% for fiscal years 2020 and 2019 and 31.54% for fiscal year 2018, respectively, to income before income taxes reported in the Consolidated Statements of Comprehensive Income is as follows (in thousands):



	Fiscal Year
	2020			2019			2018
Federal income tax at statutory rate	$	19,525		$	18,202		$	24,766
State income taxes, net of federal benefit	3,297			3,111			2,330
Stock-based compensation	(2,994		)	(2,507		)	(2,121		)
Tax credits	(2,401		)	(1,506		)	(1,776		)
Impact of Tax Act	—			314			(4,824		)
Domestic production activities deduction	—			—			(2,001		)
Other	486			440			647
Total income tax provision	$	17,913		$	18,054		$	17,021

Net long-term deferred tax assets and liabilities were as follows (in thousands):



	March 28, 2020			March 30, 2019
Net long-term deferred tax (liabilities) assets
Goodwill	$	(16,120	)	$	(15,644	)
Property, plant, equipment and depreciation	(5,084		)	(4,157		)
Warranty reserves	4,444			4,097
Lease - Operating lease liability	3,535			—
Lease - Right of use asset	(3,295		)	—
Stock-based compensation	2,595			2,564
Loan discount	2,436			3,075
Salaries and wages	1,679			1,751
Other intangibles	(1,534		)	(1,791		)
Accrued volume rebates	1,189			1,734
Inventory	1,012			1,158
Prepaid expenses	(474		)	(2,142		)
Other	2,322			2,353
	$	(7,295	)	$	(7,002	)

The effective income tax rate for the current year was positively impacted by the recognition of certain tax credits under the 2020 Appropriations Bill that was signed into law on December 20, 2019, stock option exercises, research and development tax credits and work opportunity tax credits.

The Company recorded an insignificant amount of unrecognized tax benefits during fiscal years 2020, 2019 and 2018, and there would be an insignificant effect on the effective tax rate if all unrecognized tax benefits were recognized. The Company classifies interest and penalties related to unrecognized tax benefits in income tax expense. The total amount of unrecognized tax benefit related to any particular tax position is not anticipated to change significantly within the next 12 months. At March 28, 2020, the Company has state net operating loss carryforwards that total $8.0 million, which begin to expire in 2025. The Company recorded a $270,000 valuation allowance against the related deferred tax asset.

The Company periodically evaluates the deferred tax assets based on the requirements established in ASC 740, which requires the recording of a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The determination of the need for or amount of any valuation allowance involves significant management judgment and is based upon the evaluation of both positive and negative evidence, including management projections of anticipated taxable income. At March 28, 2020, the Company evaluated its historical profits earned and forecasted taxable income and determined that, except as described above, all of the deferred tax assets would be utilized in future periods. Ultimate realization of the deferred tax assets depends on the Company's ability to continue to earn profits as we have historically and to meet these forecasts in future periods.

Income tax returns are filed in the U.S. federal jurisdiction and in several state jurisdictions. In August 2017, the Company received a notice of examination from the Internal Revenue Service ("IRS") for the Company's federal income tax return for the fiscal year ended April 2, 2016. In July 2018, the Company received notice from the IRS that its examination was complete and resulted in no changes. In general, the Company is no longer subject to examination by the IRS for years before fiscal year 2017 or state and local income tax examinations by tax authorities for years before fiscal year 2016. The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to the Company's financial position.