Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.20.1
Income Taxes
12 Months Ended
Feb. 01, 2020
Income Taxes  
Income Taxes

11.   Income taxes

The provision for income taxes consists of the following:

Fiscal

Fiscal

Fiscal

(In thousands)

    

2019

    

2018

    

2017

Current:

 

  

 

  

 

  

Federal

$

163,596

$

137,255

$

230,006

State

31,106

29,247

28,714

Total current

194,702

166,502

258,720

Deferred:

  

  

  

Federal

1,182

29,374

(26,256)

State

4,321

4,706

(839)

Total deferred

5,503

34,080

(27,095)

Provision for income taxes

$

200,205

$

200,582

$

231,625

A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows:

    

Fiscal

Fiscal

Fiscal

    

2019

    

2018

    

2017

Federal statutory rate

21.0

%  

21.0

%  

33.7

%  

State effective rate, net of federal tax benefit

 

3.1

%  

3.1

%  

2.4

%  

Re-measurement of deferred tax liabilities

0.0

%  

0.0

%  

(4.9)

%  

Excess deduction of stock compensation

(1.1)

%  

(0.6)

%  

(1.2)

%  

Other

 

(0.9)

%  

(0.2)

%  

(0.6)

%  

Effective tax rate

 

22.1

%  

23.3

%  

29.4

%  

At February 3, 2018, the Company recorded a provisional tax expense related to the impacts of the Tax Cuts and Jobs Act (Tax Reform). The SEC issued guidance on December 22, 2017 under Staff Accounting Bulletin No. 118 (“SAB 118”) which allowed recording a provisional tax expense using a measurement period, not to exceed more than one year from the enactment date. The Company’s accounting for the impacts of the Tax Reform is complete and the Company has not recorded any material adjustments to the provisional amounts under SAB 118.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

    

February 1,

February 2,

(In thousands)

    

2020

    

2019

Deferred tax assets:

 

  

 

  

Operating lease liability

$

496,977

$

Reserves not currently deductible

35,626

30,669

Accrued liabilities

 

27,363

 

34,391

Employee benefits

 

22,907

 

18,491

Inventory valuation

 

4,021

 

4,107

NOL carryforwards

288

413

Credit carryforwards

 

224

 

237

Other

1,019

Total deferred tax assets

 

588,425

 

88,308

Deferred tax liabilities:

 

  

 

  

Operating lease asset

567,198

Property and equipment

 

61,570

 

69,265

Prepaid expenses

 

45,354

 

39,915

Receivables not currently includable

2,863

1,449

Intangibles

807

1,018

Deferred rent obligation

 

 

60,525

Total deferred tax liabilities

 

677,792

 

172,172

Net deferred tax liability

$

(89,367)

$

(83,864)

At February 1, 2020, the Company had $224 of credit carryforwards for state income tax purposes that expire between 2024 and 2029. The Company also had $523 of state net operating loss (NOL) carryforwards that expire by 2036 and $1,145 of federal and $26 of state NOL carryforwards that do not expire.

The Company accounts for uncertainty in income taxes in accordance with the ASC 740-10 rules for income taxes. The reserve for uncertain tax positions was $3,536 and $3,844 at February 1, 2020 and February 2, 2019, respectively. The balance is the Company’s best estimate of the potential liability for uncertain tax positions. A reconciliation of the Company’s unrecognized tax benefits, excluding interest and penalties, is as follows:

    

February 1,

February 2,

(In thousands)

    

2020

    

2019

Balance at beginning of the year

$

3,844

$

3,565

Increase due to a prior year tax position

 

602

 

1,008

Decrease due to a prior year tax position

 

(910)

 

(729)

Balance at end of the year

$

3,536

$

3,844

The Company acknowledges that the amount of unrecognized tax benefits may change in the next twelve months. However, it does not expect the change to have a significant impact on its consolidated financial statements. Income tax-related interest and penalties were insignificant for fiscal 2019 and 2018.

The Company files tax returns in the U.S. federal and state jurisdictions. The Company is no longer subject to U.S. federal examinations by the Internal Revenue Service for years before 2018 and is no longer subject to examinations by state authorities before 2015.