v3.24.3
Income Taxes
 12 Months Ended
Sep. 29, 2024
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Income taxes consist of the following in each fiscal year (in thousands):
202420232022
Current:
Federal$32,251 $53,229 $28,934 
State10,933 17,274 9,320 
43,184 70,503 38,254 
Deferred:
Federal(2,696)(10,642)5,344 
State(8,116)(1,347)2,513 
(10,812)(11,989)7,857 
Income tax expense from continuing operations$32,372 $58,514 $46,111 
Our expense (benefit) for income taxes differs from the amount computed by applying the U.S. federal statutory rate to pre-tax income (loss). The sources and tax effects of the differences are as follows (in thousands):
202420232022
Pre-tax income (loss)$(4,323)$189,340 $161,892 
Income tax at federal statutory rate(908)21.0 %39,821 21.0 %33,964 21.0 %
State income taxes, net of federal benefit(233)5.4 %10,587 5.6 %8,437 5.2 %
Stock-based compensation expense51 (1.2)%71 — %122 0.1 %
Tax credits, net of valuation allowance(340)7.9 %(818)(0.4)%(906)(0.6)%
Nondeductible goodwill related to impairment35,075 (811.5)%— — %— — %
Nondeductible goodwill related to the sale of company-operated restaurants1,787 (41.3)%9,280 4.9 %— — %
Nondeductible transaction costs— — %— — %940 0.6 %
Expense (benefit) related to COLIs(4,703)108.8 %(1,947)(1.0)%3,319 2.1 %
Officers’ compensation limitation1,306 (30.2)%1,188 0.6 %677 0.4 %
Other, net337 (7.8)%332 0.2 %(442)(0.3)%
Effective tax rate$32,372 (748.9)%58,514 30.9 %46,111 28.5 %
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at each fiscal year-end are presented below (in thousands):
20242023
Deferred tax assets:
Operating and finance lease liabilities$381,522 $372,095 
Accrued defined benefit pension and postretirement benefits22,074 18,896 
Deferred income15,465 15,137 
Accrued legal settlements4,764 11,099 
Accrued insurance7,135 8,086 
Share-based compensation6,814 6,139 
Accrued incentive compensation2,692 5,928 
Capitalized research costs1,443 1,943 
Tax loss and tax credit carryforwards387 1,956 
Accrued compensation expense1,254 1,259 
Other reserves and allowances1,241 1,144 
Property and equipment, net of impairment5,847 181 
Other, net4,201 3,852 
Total gross deferred tax assets454,839 447,715 
Valuation allowance— (1,043)
Total net deferred tax assets454,839 446,672 
Deferred tax liabilities:
Operating and finance lease ROU assets(378,531)(380,040)
Intangible assets(88,378)(84,969)
Investment basis limitation— (6,191)
Other(1,542)(1,701)
Total gross deferred tax liabilities(468,451)(472,901)
Net deferred tax liabilities$(13,612)$(26,229)
Deferred tax assets as of September 29, 2024 include state gross net operating loss carryforwards of approximately $11.4 million, of which $9.1 million has an indefinite carryforward. The remainder will expire at various times between 2026 and 2042. At September 29, 2024, California Enterprise Zone Credit carryforwards expired, and the Company released $1.0 million of deferred tax assets and $1.0 million of valuation allowances thereto. We believe it is more likely than not that all other deferred tax assets will be realized through future taxable income or alternative tax strategies.
The major jurisdictions in which the Company files income tax returns includes the United States and states in which we operate that impose an income tax. The federal statutes of limitations have not expired for fiscal year 2021 and forward. The statutes of limitations for California, which constitutes the Company's major state tax jurisdiction, have not expired for fiscal years 2018 and forward.