Annual report pursuant to Section 13 and 15(d)

Income Taxes

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Income Taxes
 12 Months Ended
Dec. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Prior to June 7, 2021, the Company was a limited liability company taxed as a partnership for U.S. federal income tax purposes. The Company was generally not directly subject to income taxes under the provisions of the Internal Revenue Code and most applicable state laws. Therefore, taxable income or loss was reported to the members for inclusion in their respective income tax returns.
After June 7, 2021, the Company is taxed as a Corporation for U.S. income tax purposes and similar sections of the state income tax laws. The Company’s effective tax rate is based on pre-tax earnings, enacted U.S. statutory tax rates, non-deductible expenses, and certain tax rate differences between U.S. and foreign jurisdictions. The foreign subsidiaries file income tax returns in the United Kingdom, France, Australia, and Singapore as necessary. The Company’s provision for income taxes consists of provisions for federal, state, and foreign income taxes.
The provision for income taxes for the years ended December 30, 2023, December 31, 2022 and January 1, 2022 includes amounts related to entities within the Company taxed as corporations in the United States of America, United Kingdom, France, Australia, and Singapore. The Company determines its provision for income taxes for interim periods using an estimate of its annual effective tax rate on year to date ordinary income and records any changes affecting the estimated annual effective tax rate in the interim period in which the change occurs. Additionally, the income tax effects of significant unusual or infrequently occurring items are recognized entirely within the period in which the event occurs.
During the years ended December 30, 2023, December 31, 2022 and January 1, 2022, the Company recorded a total income tax provision of approximately $47.1 and $37.6 and $6.5 on pre-tax income of approximately $182.8 and $145.3 and $50.3 resulting in an effective tax rate of 25.8%, 25.9% and 12.9%, respectively. The effective tax rates for the years ended December 30, 2023, December 31, 2022 and January 1, 2022, were primarily impacted by state income taxes (net of federal benefits), statutory rate differential and permanent differences.
The carrying values of deferred income tax assets and liabilities reflect the application of our income tax accounting policies in accordance with applicable accounting standards, and are based on management’s assumptions and estimates regarding future operating results and levels of taxable income, as well as management’s judgment regarding the interpretation of the provisions of applicable accounting standards. The carrying values of liabilities for income taxes currently payable are based on management’s interpretations of applicable tax laws, and incorporate management’s assumptions, and judgments regarding the use of tax planning strategies in various taxing jurisdictions. The use of different estimates, assumptions and judgments in connection with accounting for income taxes may result in materially different carrying values of income tax assets and liabilities and results of operations.
We evaluate the recoverability of these deferred tax assets by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income inherently rely on estimates. We use our historical experience and our short-term and long-term business forecasts to provide insight. Further, our global business portfolio gives us the opportunity to employ various prudent and feasible tax planning strategies to facilitate the recoverability of future deductions. To the extent we do not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established.
For the years ended December 30, 2023, December 31, 2022 and January 1, 2022, income before taxes consist of the following:
(in millions) Year Ended
December 30, 2023 December 31, 2022 January 01, 2022
US operations $ 178.7  $ 140.7  $ 54.1 
Foreign operations 4.1  4.6  (3.8)
Total $ 182.8  $ 145.3  $ 50.3 
Income tax expense (benefit) attributable to income from operations consists of (in millions):
Current Deferred Total
Year ended December 30, 2023:
U.S. federal $ 27.8  $ 9.5  $ 37.3 
State and local 7.6  0.5  8.1 
Foreign jurisdiction 2.2  (0.5) 1.7 
Total $ 37.6  $ 9.5  $ 47.1 
Current Deferred Total
Year ended December 31, 2022:
U.S. federal $ 19.4  $ 9.8  $ 29.2 
State and local 3.4  3.6  7.0 
Foreign jurisdiction 1.3  0.1  1.4 
Total $ 24.1  $ 13.5  $ 37.6 
Current Deferred Total
Year ended January 1, 2022:
U.S. federal $ 0.6  $ 4.4  $ 5.0 
State and local 1.6  —  1.6 
Foreign jurisdiction (0.5) 0.4  (0.1)
Total $ 1.7  $ 4.8  $ 6.5 
Income tax expense (benefit) attributable to income from continuing operations was approximately $47.1, $37.6, and $6.5 for the years ended December 30, 2023, December 31, 2022, and January 1, 2022, respectively:
(in millions) Year Ended
December 30, 2023 December 31, 2022 January 01, 2022
Income before taxes $ 182.8  $ 145.3  $ 50.3 
Computed “expected” tax expense 38.4  30.5  10.6 
Increase (reduction) in income taxes resulting from:
Statutory rate differential 0.2  0.4  (5.6)
Permanent difference 0.4  —  1.8 
State income taxes, net of federal benefit 7.8  6.0  1.3 
Change in tax rates (1.2) 1.2  (1.4)
Change in estimate (0.2) 0.8  0.2 
Change in valuation allowance —  (0.3) (0.9)
Tax Credits (0.6) (1.3) — 
U.S. tax on foreign operations 0.9  —  — 
Other, net 1.4  0.3  0.5 
Total $ 47.1  $ 37.6  $ 6.5 
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 30, 2023 and December 31, 2022 are presented below (in millions):
December 30, 2023 December 31, 2022
Deferred tax assets
Allowance for doubtful accounts $ 1.3  $ 0.1 
Other accrued expenses 0.9  0.6 
Inventories 0.2  0.3 
Leases 11.9  0.6 
Tax credits carryforward 0.1  0.5 
Intangibles 36.3  48.2 
Stock compensation 1.5  0.8 
Interest expense carryforward 0.2  0.2 
Other 0.3  0.1 
Total deferred tax assets $ 52.7  $ 51.4 
Deferred tax liabilities
Property and equipment $ (6.0) $ (5.7)
Prepaids (0.7) (0.7)
Right-of-use assets (10.9) — 
Other —  (0.3)
Total deferred liabilities $ (17.6) $ (6.7)
Net deferred tax asset $ 35.1  $ 44.7 

The difference between income tax expense recorded in our consolidated statements of operations and comprehensive income and income taxes computed by applying the corporate statutory federal income tax rate (21% for the years ended December 30, 2023, December 31, 2022 and January 1, 2022) to income before income tax expense is due to the fact that the majority of our income was not subject to federal income tax due to our status as a limited liability company prior to June 7, 2021. In general, only the corporate entities in our structure are subject to federal tax at 21%. The Company realized a current tax benefit of $0.2 from the utilization of state net operating loss carryforwards. We record a tax provision related to the amount of undistributed earnings of our foreign subsidiaries expected to be repatriated.
At December 30, 2023 and December 31, 2022, the Company had no net operating loss carryforwards for Federal income tax purposes which would be available to offset future federal taxable income, if any, and would not be subject to expiration. At December 30, 2023 and December 31, 2022, the Company has net operating loss carryforwards for state income tax purposes of $1.8 and $4.6 which are available to offset future state taxable income, of which $0.4 and $0.6 are subject to expiration beginning in 2030 and 2038, respectively.
In evaluating its ability to realize its net deferred tax assets, the Company considered all available positive and negative evidence, including its past operating results, forecasted earnings, future taxable income, and prudent and feasible tax planning strategies.
ASC 740 clarifies the accounting for uncertainty in income taxes and prescribes a recognition threshold and measurement attributes for financial statement disclosure of income tax positions taken or expected to be taken on an income tax return. As of December 30, 2023 and December 31, 2022 there were no accrued interest and penalties associated with unrecognized tax benefits. Management believes there are no material amounts of tax positions for which there is uncertainty as of December 30, 2023 and December 31, 2022. There are no changes expected in the next 12 months.
Management of Janus is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states. For the years before 2019, the Company is no longer subject to U.S. federal tax examinations, and for the years before 2018, the Company is no longer subject to U.S. or state income tax examinations. For the years before 2018, the Company is no longer subject to examination by the United Kingdom, French, Australia, and Singapore taxing authorities in those jurisdictions.