Income Taxes

12 Months Ended

Apr. 02, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

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 following details the provision for income taxes for fiscal years 2022, 2021 and 2020 (in thousands):

	2022		2021		2020
Current
Federal	$	7,271	$	16,823	$	14,625
State	8,768		3,128		3,084
	16,039		19,951		17,709
Deferred
Federal	(1,257)		302		246
State	(535)		13		(42)
	(1,792)		315		204
	$	14,247	$	20,266	$	17,913

A reconciliation of income taxes computed by applying the expected federal statutory income tax rate of 21% for fiscal years 2022, 2021 and 2020 to income before income taxes reported in the Consolidated Statements of Comprehensive Income is as follows (in thousands):

	2022		2021		2020
Federal income tax at statutory rate	$	44,518	$	20,351	$	19,525
State income taxes, net of federal benefit	8,075		3,422		3,297
Stock-based compensation	(1,421)		(2,710)		(2,994)
Tax credits	(37,488)		(1,356)		(2,401)
Other	563		559		486
	$	14,247	$	20,266	$	17,913

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

	April 2, 2022		April 3, 2021
Net deferred tax (liabilities) assets
Goodwill	$	(16,675)	$	(16,327)
Property, plant and equipment	(7,030)		(5,121)
Warranty reserves	5,913		4,277
Lease - Operating lease liability	4,270		4,123
Lease - Right of use assets	(3,968)		(3,820)
Salaries and wages	3,924		3,065
Accrued volume rebates	2,600		1,494
Stock-based compensation	2,199		2,177
Inventory	2,192		1,271
Unrealized gains on marketable equity investments	(1,715)		(1,695)
Loan discount	1,275		1,631
Other intangibles	—		(1,538)
Other	1,487		3,070
	$	(5,528)	$	(7,393)

The effective income tax rate for the current year was positively impacted by the recognition of tax credits and stock option exercises. The net tax credit benefit predominantly related to the sale of energy efficient homes between fiscal year 2018 and fiscal third quarter 2022 available under the Internal Revenue Code §45L. Of the total tax credit benefit, $30.6 million relates to fiscal year 2018 through fiscal year 2021 and $6.4 million relates to fiscal year 2022, which includes non-recurring credits that were recognized during the 2022 fiscal year. The remaining $500,000 relates to the Research and Development and Work Opportunity Tax Credits. The §45L tax credit was initially established under the Federal Energy Policy Act of 2005 and most recently extended in the Consolidated Appropriations Act, 2021. The §45L credit expired in its current form as of December 31, 2021. The Company determined eligibility for the program in consultation with third-party qualified experts and recognized the benefit for the five eligible years during fiscal year 2022.

We recorded an insignificant amount of unrecognized tax benefits during fiscal years 2022, 2021 and 2020, and there would be an insignificant effect on the effective tax rate if all unrecognized tax benefits were recognized. We classify 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. We believe that our income tax filing positions and deductions will be sustained on audit and we do not anticipate any adjustments that will result in a material change to our financial position.

We periodically evaluate 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 April 2, 2022, we had state net operating loss carryforwards that total $8.6 million, which begin to expire in 2038. We recorded a $308,000 valuation allowance against the related deferred tax asset. At April 2, 2022, we evaluated our 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 our 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 general, we are no longer subject to examination by the IRS or state and local income tax examinations by tax authorities for years before fiscal year 2018.