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Income Taxes
 12 Months Ended
Jan. 02, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The provision (benefit) for income taxes was comprised of the following:
Year ended
 January 2, 2022January 3, 2021December 29, 2019
Current:
   Federal$— $— $(260)
   State(36)268 119 
(36)268 (141)
Deferred:
   Federal(12,374)(6,039)(9,768)
   State(4,021)(1,073)(2,214)
(16,395)(7,112)(11,982)
Increase in valuation allowance11,272 13,138 — 
Provision (benefit) for income taxes$(5,159)$6,294 $(12,123)
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 amount used for income tax purposes.
The components of deferred income tax assets and liabilities at January 2, 2022 and January 3, 2021 were as follows:
 January 2, 2022January 3, 2021
Deferred income tax assets: 
Operating lease liabilities$217,236 $219,096 
Federal net operating loss carryforwards26,839 28,880 
Tax credit carryforwards39,965 35,650 
State net operating loss carryforwards6,837 6,032 
Interest expense limitation under section 163 (j)1,345 — 
Stock-based compensation expense1,683 1,323 
Accrued vacation benefits2,844 2,684 
Accumulated other comprehensive income-accrued interest rate swap— 1,841 
Postretirement benefit obligations766 853 
Other deferred income tax assets6,507 4,345 
Gross deferred income tax assets304,022 300,704 
Less: Valuation allowance(24,410)(13,138)
Total deferred income tax assets$279,612 $287,566 
Deferred income tax liabilities: 
Operating right-of-use assets(202,887)(205,897)
Property and equipment depreciation(18,092)(26,056)
Franchise rights(63,030)(65,329)
Accumulated other comprehensive income-postretirement benefits(380)(474)
Accumulated other comprehensive income-accrued interest rate swap(161)— 
Other deferred income tax liabilities(2,679)(1,172)
Total deferred income tax liabilities(287,229)(298,928)
Net long-term deferred income tax liabilities$(7,617)$(11,362)
The Company's federal net operating loss carryforwards generated prior to December 31, 2017 expire beginning in 2035. Federal net operating losses generated subsequent to 2017 have no expiration date. As of January 2, 2022, the Company had federal net operating loss carryforwards of approximately $127.8 million, general business credits ("GBC") carryforwards of $40.0 million and approximately $143.9 million in state net operating loss carryforwards. The Company's GBC carryforwards begin to expire in 2031 and state net operating loss carryforwards begin to expire in 2022.
The Company has performed the required assessment of positive and negative evidence regarding the realization of deferred income tax assets in accordance with ASC 740 at January 2, 2022 and January 3, 2021. Under ASC 740, the weight given to negative and positive evidence is commensurate only to the extent that such evidence can be objectively verified. ASC 740 prescribes that objective historical evidence, in particular the Company’s three-year cumulative loss position at January 2, 2022, be given a greater weight than subjective evidence, including the Company’s forecast of future taxable income, which include assumptions that cannot be objectively verified. In determining the likelihood of future realization of the deferred income tax assets as of January 2, 2022 and January 3, 2021 the Company considered both positive and negative evidence and weighted the effect of such evidence based upon its objectivity. Based on the required weight of evidence under ASC 740, as of January 2, 2022 and January 3, 2021, the Company determined the valuation allowances needed for certain federal
income tax credits that may expire prior to their utilization by the Company of $24.4 million and $13.1 million, respectively. The amount of the deferred tax asset to be considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as projections for growth. The company recorded income tax expense of $11.3 million and $13.1 million in fiscal 2021 and 2020, respectively, relative to this valuation reserve.
A reconciliation of the statutory federal income tax provision to the income tax provision (benefit) for the years ended January 2, 2022, January 3, 2021, and December 29, 2019 was as follows:
Year ended
 January 2, 2022January 3, 2021December 29, 2019
Statutory federal income tax provision (benefit)$(10,119)$(4,865)$(9,249)
State income taxes, net of federal benefit(2,934)(726)(1,655)
Employment tax credits(3,274)(2,585)(2,938)
Change in valuation allowances11,272 13,138 — 
Non-deductible expenses431 214 1,374 
Stock-based compensation127 525 308 
Rate change(163)312 — 
Miscellaneous(499)281 37 
Provision (benefit) for income taxes$(5,159)$6,294 $(12,123)
The Company's policy is to recognize interest and/or penalties related to uncertain tax positions in income tax expense. At January 2, 2022 and January 3, 2021, the Company had no unrecognized tax benefits and no accrued interest related to uncertain tax positions. The tax years 2017 - 2020 remain open to examination by the major taxing jurisdictions to which the Company is subject. Although it is not reasonably possible to estimate the amount by which unrecognized tax benefits may increase within the next twelve months due to uncertainties regarding the timing of examinations, the Company does not expect unrecognized tax benefits to significantly change in the next twelve months.
On March 27, 2020, the United States enacted the CARES Act as a response to the economic uncertainty resulting from COVID-19. The CARES Act includes modifications for net operating loss carryovers and carrybacks, limitations of business interest expense for tax, immediate refund of alternative minimum tax (AMT) credit carryovers as well as a technical correction to the Tax Cuts and Jobs Act of 2017, referred to herein as the U.S. Tax Act, for qualified improvement property. As of January 2, 2022, the Company expects that the carryback of net operating losses will not have an impact on its current tax attributes.