Post-effective amendment to a registration statement that is not immediately effective upon filing

Income Taxes

v3.22.1
Income Taxes
 3 Months Ended 12 Months Ended
Apr. 02, 2022
Jan. 01, 2022
Income Tax Disclosure [Abstract]    
Income Taxes
15. 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 tax returns.
After June 7, 2021, the Group is taxed as a Corporation for U.S. income tax purposes and similar sections of the state income tax laws. The Group’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. For tax reporting purposes, the taxable income or loss with respect to the 45% ownership in the joint venture operating in Mexico will be reflected in the income tax returns filed under that country’s jurisdiction. The Group’s provision for income taxes consists of provisions for federal, state, and foreign income taxes.
The provision for income taxes for the three months ended April 2, 2022 and March 27, 2021 includes amounts related to entities within the group taxed as corporations in the United States, 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 three months ended April 2, 2022 and March 27, 2021, the Company recorded a total income tax provision (benefit) of approximately $6,607 and $(155) on
pre-tax
income of approximately $26,311 and $14,564 resulting in an effective tax rate of 25.1% and (1.1)%, respectively. The effective tax rates for these periods were primarily impacted by the change in tax status of the Group, statutory rate differentials, changes in estimated tax rates, and permanent differences.
18. 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 Group is taxed as a Corporation for U.S. income tax purposes and similar sections of the state income tax laws. The Group’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. For tax reporting purposes, the taxable income or loss with respect to the
45
% ownership in the joint venture operating in Mexico will be reflected in the income tax returns filed under that country’s jurisdiction. The Group’s provision for income taxes consists of provisions for federal, state, and foreign income taxes.
The provision for income taxes for the years ended January 1, 2022, December 26, 2020 and December 28, 2019,
includes amounts related to entities within the group taxed as corporations in the United States, United Kingdom, France, Australia, and Singapore. The Company determines its provision for income taxes for interim periods and annual 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 January 1, 2022, December 26, 2020, and December 28, 2019, the Company recorded a total income tax provision of
approximately
$6,481
,
$2,114
, and $636, on
pre-tax
income of approximately
$50,283
,
$58,951
, and $40,035 resulting in an
 
effective tax rate of
12.9%
,
3.6%
, and 1.6%, respectively. The

effective tax rates for the year ended January 1, 2022 were primarily impacted by the change in tax status of the

Group from partnership to corporation, statutory rate differentials, changes in estimated tax rates, valuation allowances and permanent differences and
for the year ended December 26, 2020, were primarily impacted by the tax status of the Group being a partnership and permanent differences.
For the years ended January 1, 2022, December 26, 2020, and December 28, 2019, income (loss) from continuing operations before taxes consist of the following:


 
  
Year Ended
 
 
  
January 1, 2022
 
 
December 26, 2020
 
  
December 28, 2019
 
US operations
    $ 54,067      $ 56,019
 
  
$
35,179
 
Foreign operations
      (3,784 )       2,932
 
  
 
4,856
 
    
 
 
     
 
 
  
  
 
 
 
Total
   
$
50,283
 
   
$
58,951
 
  
$
40,035
 
    
 
 
     
 
 
  
  
 
 
 
Income tax expense (benefit) attributable to income from continuing operations consists of:

 
 
  
Current
 
 
Deferred
 
  
Total
 
Year ended January 1, 2022:
                           
U.S. federal
    $ 629      $ 4,376      $ 5,005  
State and local
      1,529        10        1,539  
Foreign jurisdiction
      (526 )       463        (63 ) 
    
 
 
     
 
 
     
 
 
  
Total
   
$
1,632
 
   
$
4,849
 
   
$
6,481
 
    
 
 
     
 
 
     
 
 
  

 
  
Current
 
 
Deferred
 
 
Total
 
Year ended December 26, 2020:
                           
U.S. federal
    $ (2 )     $ 823      $ 821  
State and local
      612        (473 )       139  
Foreign jurisdiction
      1,155        (1 )       1,154  
    
 
 
     
 
 
     
 
 
  
Total
   
$
1,765
 
   
$
349
 
   
$
2,114
 
    
 
 
     
 
 
     
 
 
  
 
 
  
Current
 
 
Deferred
 
 
Total
 
Year ended December 28, 2019:
  
      
  
      
  
      
U.S. federal
  
$
(223
) 
  
$
(569
) 
  
$
(791
) 
State and local
  
 
313
 
  
 
(194
) 
  
 
120
 
Foreign jurisdiction
  
 
1,234
 
  
 
73
 
  
 
1,307
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Total
  
$
1,324
 
  
$
(690
) 
  
$
636
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
Income
 tax expense (benefit) attributable to income from continuing operations was approximately $6,481
,
$2,114
and $636 for the years ended January 1, 2022, December 26, 2020, and December 28, 2019, respectively, and differed from the amounts computed by applying the partnership’s U.S. federal income tax rate of zero for the year ended December 26, 2020 and for the partial period up to the Business Combination date of June 7, 2021, presented to pretax income from continuing operations as a result of the following:
 
 
  
Year Ended
 
 
  
January 1, 2022
 
 
December 26, 2020
 
 
December 28, 2019
 
Income before taxes
    $ 50,283     $ 58,951  
 
$
40,035
 
Computed “expected” tax expense
      10,559       —    
 
 
—  
 
Increase (reduction) in income taxes resulting from:
                 
 
 
 
 
Statutory rate differential
      (5,606 )      1,281  
 
 
13
 
Permanent difference
      1,776       697  
 
 
364
 
State income taxes, net of federal benefit
      1,284       519  
 
 
154

Change in tax rates
      (1,342 )      (421 ) 
 
 
172
 
Change in estimate
      175       (146 ) 
 
 
(152
)
 
Change in valuation allowance
      (938 )      —    
 
 
—  
 
Other, net
      573       184  
 
 
85
 
    
 
 
    
 
 
  
 
 
 
 
Total
   
$
6,481
 
  
$
2,114
 
 
$
 
 
636
 
 
  
 
 
 
  
 
 
 
  
 
 
 
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at January 1, 2022 and December 26, 2020 are presented below:
 
 
  
January 1,
 
 
December 26,
 
 
  
2022
 
 
2020
 
Deferred tax assets
  
      
  
      
Allowance for doubtful accounts
    $ 101      $ 15  
Other accrued expenses
      863        222  
Inventories
      210        66  
Interest expense
  
 
—  
 
  
 
—  
 
Leases
      3        9  
Tax incentives
      113        —    
Intangibles
      61,465        —    
Net operating loss carryforward
      1,095        1,670  
Other
      17        83  
    
 
 
     
 
 
  
Total gross deferred tax assets
      63,867        2,065  
Less: valuation allowance
      (256 )       —    
    
 
 
     
 
 
  
Net deferred tax assets
      63,611        2,065  
    
 
 
     
 
 
  
 
 
 
 
 
 
 
 
 
Deferred tax liabilities
                  
Intangibles
      —          (15,200 ) 
Property and equipment
      (4,360 )       (2,134 ) 
Prepaids
      (816 )       —    
Other
      (269 )       —    
    
 
 
     
 
 
  
Total gross deferred liabilities
      (5,445 )       (17,334 ) 
    
 
 
     
 
 
  
Net deferred tax asset (liability)
   
$
58,166
 
   
$
(15,269
) 
 
  
 
 
 
  
 
 
 
 

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 year ended January 1, 2022
, December 26, 2020,
 
and December 
28
, 20
19
) 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 $6,901 from the utilization of 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 January 1, 2022 and December 26, 2020, the Company has net operating loss carryforwards for Federal income tax purposes of
$
0
 
and
$6,901,
respectively, which are available to offset future federal taxable income, if any, and are not subject to expiration. At January 1, 2022 and December 26, 2020, the Company has net operating loss carryforwards for state income tax purposes of 
$
5,382
 and
 
$
4,961
, which are available to offset future state taxable income, of which
$
2,018
 and
 $1,950
 
are subject to expiration beginning in 2024 and 2036, 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. As of January 1, 2022, the Company has set up a valuation allowance against state net operating loss in the amount of $256 due to losses incurred in a subsidiary which does not generate operating income, thus the Company does not believe a tax benefit is more likely than not to be realized for that subsidiary’s state net operating losses.

The Company recognizes accrued interest associated with unrecognized tax benefits as part of interest expense and penalties associated with unrecognized tax benefits as part of other expenses. As of January 1
, 2022
and December 26
, 2020
, 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 January 1
, 2022
and December 26
, 2020
. 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 2017, the Company is no longer subject to U.S. federal or state income tax examinations. For the years before 2017, the Company is no longer subject to examination by the United Kingdom, French, Australia, and Singapore taxing authorities in those jurisdictions.