Income Taxes

6 Months Ended

Jul. 04, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

In the three months ended July 4, 2021, our income tax provision of $2.4 million on a profit from continuing operations before income taxes and equity in earnings of unconsolidated investees of $77.2 million was primarily due to the deferred tax liability on mark-to-market unrealized gains on equity investments. Our income tax provision of $1.1 million in the three months ended June 28, 2020 on a profit from continuing operations before income taxes and equity in earnings of unconsolidated investees of $55.6 million was primarily due to tax expense in foreign jurisdictions, unrelated to Maxeon Solar, that were profitable.

In the six months ended July 4, 2021, our income tax benefit of $2.8 million on a profit from continuing operations before income taxes and equity in earnings of unconsolidated investees of $22.5 million was primarily due to windfall benefits from stock-based compensation deduction and the true-up of estimated state tax liability, partially offset by deferred tax liability on mark-to-market unrealized gains on equity investments. Our income tax provision of $2.0 million the six months ended June 28, 2020 on a profit from continuing operations before income taxes and equity in earnings of unconsolidated investees of $76.7 million was primarily due to tax expense in foreign jurisdictions, unrelated to Maxeon Solar, that were profitable.

During the three and six months ended July 4, 2021, in accordance with FASB guidance for interim reporting of income tax, we have computed our provision for income taxes based on a projected annual effective tax rate. Our projected effective tax rate is based on forecasted annualized results which may fluctuate significantly in future periods, in particular due to the uncertainty in our annual forecasts resulting from the unpredictable duration and severity of the COVID-19 pandemic on our operating results.

Total liabilities associated with uncertain tax positions did not significantly change at $12.2 million and $12.6 million as of July 4, 2021 and January 3, 2021, respectively.