Cracker Barrel 2014 Annual Report Download - page 53

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A reconciliation of the Company’s provision for income
taxes and income taxes based on the statutory U.S. federal
rate of 35% was as follows:
2014 2013 2012
Provision computed at federal
statutory income tax rate $ 66,797 $ 58,024 $ 51,201
State and local income taxes,
net of federal benet 5,029 5,698 6,424
Employer tax credits for FICA taxes
paid on employee tip income (9,962) (9,635) (9,114)
Other employer tax credits (3,781) (5,927) (4,938)
Other-net 638 357 (366)
Total provision for income taxes $ 58,721 $ 48,517 $ 43,207
Signicant components of the Company’s net deferred tax
liability consisted of the following at:
August 1, 2014 August 2, 2013
Deferred tax assets:
Compensation and employee benets $ 10,858 $ 16,750
Deferred rent 14,900 13,535
Accrued liabilities 13,942 12,766
Insurance reserves 11,944 12,091
Inventory 6,212 5,669
Other 3,172 4,437
Deferred tax assets $ 61,028 $ 65,248
Deferred tax liabilities:
Property and equipment $ 88,543 $ 94,179
Inventory 13,415 13,700
Other 9,591 9,550
Deferred tax liabilities 111,549 117,429
Net deferred tax liability $ 50,521 $ 52,181
e Company believes that adequate amounts of tax,
interest and penalties have been provided for potential
tax uncertainties; these amounts are included in other long-
term liabilities in the Consolidated Balance Sheets. As
of August 1, 2014 and August 2, 2013, the Company’s gross
liability for uncertain tax positions, exclusive of interest
and penalties, was $22,832 and $20,972, respectively.
Summarized below is a tabular reconciliation of the beginning
and ending balance of the Company’s total gross liability
for uncertain tax positions exclusive of interest and penalties:
August 1, 2014 August 2, 2013 August 3, 2012
Balance at beginning of year $ 20,972 $ 18,098 $ 14,167
Tax positions related to the
current year:
Additions 3,989 3,731 3,326
Reductions — — —
Tax positions related to the
prior year:
Additions 1,400 191 2,556
Reductions (1,630) (280) (1,043)
Selements (755) — —
Expiration of statute of limitations (1,144) (768) (908)
Balance at end of year $ 22,832 $ 20,972 $ 18,098
If the Company were to prevail on all uncertain tax
positions, the reversal of this accrual would be a tax benet to
the Company and impact the eective tax rate. e following
table highlights the amount of uncertain tax positions,
exclusive of interest and penalties, which, if recognized, would
aect the eective tax rate for each of the three years:
2014 2013 2012
Uncertain tax positions $ 14,840 $ 13,631 $ 11,764
e Company had $8,559, $7,869 and $6,605 in interest
and penalties accrued as of August 1, 2014, August 2, 2013,
and August 3, 2012, respectively.
e Company recognized accrued interest and penalties
related to unrecognized tax benets of $691, $1,264 and
$1,225 in its provision for income taxes in August 1, 2014,
August 2, 2013 and August 3, 2012, respectively.
In many cases, the Company’s uncertain tax positions are
related to tax years that remain subject to examination by
the relevant taxing authorities. Based on the outcome of these
examinations or as a result of the expiration of the statutes
of limitations for specic taxing jurisdictions, it is reasonably
possible that the related uncertain tax positions taken
regarding previously led tax returns could decrease from
those recorded as liabilities for uncertain tax positions
in the Company’s nancial statements at August 1, 2014 by
approximately $2,000 to $4,000 within the next twelve