| Income Taxes |
13. Income taxes
The provision for income taxes consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year ended |
|
|
January 30, |
|
February 1, |
|
February 2, |
(In thousands) |
|
2021 |
|
2020 |
|
2019 |
Current: |
|
|
|
|
|
|
|
|
|
Federal |
|
$ |
67,724 |
|
$ |
163,596 |
|
$ |
137,255 |
State |
|
|
11,534 |
|
|
31,106 |
|
|
29,247 |
Total current |
|
|
79,258 |
|
|
194,702 |
|
|
166,502 |
Deferred: |
|
|
|
|
|
|
|
|
|
Federal |
|
|
(19,631) |
|
|
1,182 |
|
|
29,374 |
State |
|
|
(4,377) |
|
|
4,321 |
|
|
4,706 |
Total deferred |
|
|
(24,008) |
|
|
5,503 |
|
|
34,080 |
Provision for income taxes |
|
$ |
55,250 |
|
$ |
200,205 |
|
$ |
200,582 |
A reconciliation of the federal statutory rate to the Company’s effective tax rate is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal year ended |
|
|
January 30, |
|
February 1, |
|
February 2, |
|
|
2021 |
|
2020 |
|
2019 |
Federal statutory rate |
|
21.0 |
% |
|
21.0 |
% |
|
21.0 |
% |
State effective rate, net of federal tax benefit |
|
2.9 |
% |
|
3.1 |
% |
|
3.1 |
% |
Executive compensation limitation |
|
1.2 |
% |
|
0.2 |
% |
|
0.2 |
% |
Excess deduction of stock compensation |
|
(0.3) |
% |
|
(1.1) |
% |
|
(0.6) |
% |
Other |
|
(0.9) |
% |
|
(1.1) |
% |
|
(0.4) |
% |
Effective tax rate |
|
23.9 |
% |
|
22.1 |
% |
|
23.3 |
% |
Significant components of deferred tax assets and liabilities are as follows:
|
|
|
|
|
|
|
|
|
January 30, |
|
February 1, |
(In thousands) |
|
2021 |
|
2020 |
Deferred tax assets: |
|
|
|
|
|
|
Operating lease liability |
|
$ |
484,780 |
|
$ |
496,977 |
Reserves not currently deductible |
|
|
32,590 |
|
|
35,626 |
Accrued liabilities |
|
|
31,056 |
|
|
27,363 |
Employee benefits |
|
|
23,687 |
|
|
22,907 |
Inventory valuation |
|
|
8,386 |
|
|
4,021 |
NOL carryforwards |
|
|
255 |
|
|
288 |
Credit carryforwards |
|
|
291 |
|
|
224 |
Other |
|
|
— |
|
|
1,019 |
Total deferred tax assets |
|
|
581,045 |
|
|
588,425 |
Deferred tax liabilities: |
|
|
|
|
|
|
Operating lease asset |
|
|
561,605 |
|
|
567,198 |
Property and equipment |
|
|
32,812 |
|
|
61,570 |
Prepaid expenses |
|
|
46,013 |
|
|
45,354 |
Receivables not currently includable |
|
|
3,720 |
|
|
2,863 |
Intangibles |
|
|
585 |
|
|
807 |
Other |
|
|
1,669 |
|
|
— |
Total deferred tax liabilities |
|
|
646,404 |
|
|
677,792 |
Net deferred tax liability |
|
$ |
(65,359) |
|
$ |
(89,367) |
At January 30, 2021, the Company had $291 of credit carryforwards for state income tax purposes that expire between 2022 and 2024. The Company also had $533 of state net operating loss (NOL) carryforwards that expire by 2039 and $985 of federal and $36 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 $2,783 and $3,536 at January 30, 2021 and February 1, 2020, respectively. The balance is the Company’s best estimate of the potential liability for uncertain tax positions. A reconciliation of unrecognized tax benefits, excluding interest and penalties, is as follows:
|
|
|
|
|
|
|
|
|
January 30, |
|
February 1, |
(In thousands) |
|
2021 |
|
2020 |
Balance at beginning of the year |
|
$ |
3,536 |
|
$ |
3,844 |
Increase due to a prior year tax position |
|
|
224 |
|
|
602 |
Decrease due to a prior year tax position |
|
|
(977) |
|
|
(910) |
Balance at end of the year |
|
$ |
2,783 |
|
$ |
3,536 |
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 2020 and 2019.
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 2016.
|