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Taxes | 12 Months Ended
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Jan. 31, 2018
Income Tax Disclosure [Abstract] |
Income tax disclosure | Taxes Income Before Income Taxes The components of income before income taxes are as follows:
| Fiscal Years Ended January 31,
(Amounts in millions) | 2018 |  | 2017 |  | 2016
U.S. | $ | 10,722 |  |  | $ | 15,680 |  |  | $ | 16,685 |
Non-U.S. | 4,401 |  |  | 4,817 |  |  | 4,953 |
Total income before income taxes | $ | 15,123 |  |  | $ | 20,497 |  |  | $ | 21,638 |
A summary of the provision for income taxes is as follows:
| Fiscal Years Ended January 31,
(Amounts in millions) | 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |
U.S. federal | $ | 2,998 |  |  | $ | 3,454 |  |  | $ | 5,562 |
U.S. state and local | 405 |  |  | 495 |  |  | 622 |
International | 1,377 |  |  | 1,510 |  |  | 1,400 |
Total current tax provision | 4,780 |  |  | 5,459 |  |  | 7,584 |
Deferred: |  |  |  |  |
U.S. federal | (22 | ) |  | 1,054 |  |  | (704 | )
U.S. state and local | (12 | ) |  | 51 |  |  | (106 | )
International | (146 | ) |  | (360 | ) |  | (216 | )
Total deferred tax expense (benefit) | (180 | ) |  | 745 |  |  | (1,026 | )
Total provision for income taxes | $ | 4,600 |  |  | $ | 6,204 |  |  | $ | 6,558 |
On December 22, 2017, the Tax Act was enacted and contains significant changes to U.S. income tax law. Effective in 2018, the Tax Act reduces the U.S. statutory tax rate from 35% to 21% and creates new taxes focused on foreign-sourced earnings and related-party payments, including the creation of the base erosion anti-abuse tax and a new tax on global intangible low-taxed income ("GILTI"). By operation of law, the Company will apply a blended U.S. statutory federal income tax rate of 33.8% for fiscal 2018. In addition, the Company was subject to a one-time transition tax in fiscal 2018 on accumulated foreign subsidiary earnings not previously subject to U.S. income tax. The Securities and Exchange Commission (SEC) staff issued SAB 118 on December 22, 2017, which allows companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, the Company made reasonable estimates of the effects and recorded provisional amounts in its financial statements as of January 31, 2018, in accordance with SAB 118. As the Company collects and prepares necessary data, and interprets the Tax Act and any additional guidance issued by the U.S. Treasury Department, the IRS, and other standard-setting bodies, the Company may make adjustments to the provisional amounts during fiscal 2019. Those adjustments may materially impact the Company's provision for income taxes and effective tax rate in the period in which the adjustments are made. The accounting for the tax effects of the Tax Act will be completed by the measurement period provided in SAB 118. Provisional amounts for the following income tax effects of the Tax Act have been recorded as of January 31, 2018, and are subject to change during fiscal 2019. The net tax benefit recognized in fiscal 2018 related to the Tax Act was $0.2 billion. As the Company completes its analysis of the Tax Act and incorporates additional guidance that may be issued by the U.S. Treasury Department, the IRS or other standard-setting bodies, the Company may identify additional effects not reflected as of January 31, 2018. One-time Transition Tax The Tax Act requires the Company to pay U.S. income taxes on accumulated foreign subsidiary earnings not previously subject to U.S. income tax at a rate of 15.5% to the extent of foreign cash and certain other net current assets, as defined by the Tax Act, and 8.0% on the remaining earnings. The Company recorded a provisional amount of $1.9 billion of additional income tax expense for its one-time transitional tax liability. The Company recorded a provisional amount based on estimates as it completes its analysis of the application of the effects of the Tax Act as well as finalize its calculations surrounding the components of its foreign subsidiaries subject to the transition tax including the potential of any correlative adjustments. Deferred Tax Effects The Tax Act reduces the U.S. statutory tax rate from 35% to 21% for years after 2017. Accordingly, the Company re-measured its deferred taxes as of January 31, 2018, to reflect the reduced rate that will apply in future periods when these deferred taxes are settled or realized. The Company recognized a deferred tax benefit of $2.1 billion to reflect the reduced U.S. tax rate and other effects of the Tax Act. The benefit associated with the remeasurement of the deferred taxes is provisional as of January 31, 2018, as the Company continues gathering the necessary information to complete the calculations. The Company has no provisional adjustment with respect to the GILTI provision of the Tax Act as the Company is not able to make reasonable estimates of its related effects at this time. The Company has not yet elected an accounting policy to determine whether it will recognize GILTI as a period cost when incurred or to recognize deferred taxes for basis differences expected to reverse. Effective Income Tax Rate Reconciliation The Company's effective income tax rate is typically lower than the U.S. statutory tax rate primarily because of benefits from lower-taxed global operations, including the use of global funding structures and certain U.S. tax credits as further discussed in the "Cash and Cash Equivalents" section of the Company's significant accounting policies in Note 1. The Company's non-U.S. income is generally subject to local country tax rates that are below the U.S. statutory tax rate. Certain non-U.S. earnings have been indefinitely reinvested outside the U.S. A reconciliation of the significant differences between the U.S. statutory tax rate and the effective income tax rate on pretax income from continuing operations is as follows:
| Fiscal Years Ended January 31,
| 2018 |  | 2017 |  | 2016
U.S. statutory tax rate | 33.8 | % |  | 35.0 | % |  | 35.0 | %
U.S. state income taxes, net of federal income tax benefit | 1.8 | % |  | 1.7 | % |  | 1.8 | %
Impact of the Tax Act: |  |  |  |  |
One-time transition tax | 12.3 | % |  | — | % |  | — | %
Deferred tax effects | (14.1 | )% |  | — | % |  | — | %
Income taxed outside the U.S. | (4.1 | )% |  | (4.5 | )% |  | (4.0 | )%
Net impact of repatriated international earnings | (0.1 | )% |  | (1.0 | )% |  | 0.1 | %
Other, net | 0.8 | % |  | (0.9 | )% |  | (2.6 | )%
Effective income tax rate | 30.4 | % |  | 30.3 | % |  | 30.3 | %
Deferred Taxes The Company recorded a provisional adjustment to its U.S. deferred income taxes as of January 31, 2018 to reflect the reduction in the U.S. statutory tax rate from 35% to 21% resulting from the Tax Act. The significant components of the Company's deferred tax account balances are as follows:
|  | January 31,
(Amounts in millions) |  | 2018 |  | 2017
Deferred tax assets: |  |  |  |
Loss and tax credit carryforwards |  | $ | 1,989 |  |  | $ | 3,633 |
Accrued liabilities |  | 2,482 |  |  | 3,437 |
Share-based compensation |  | 217 |  |  | 309 |
Other |  | 1,251 |  |  | 1,474 |
Total deferred tax assets |  | 5,939 |  |  | 8,853 |
Valuation allowances |  | (1,843 | ) |  | (1,494 | )
Deferred tax assets, net of valuation allowance |  | 4,096 |  |  | 7,359 |
Deferred tax liabilities: |  |  |  |
Property and equipment |  | 3,954 |  |  | 6,435 |
Inventories |  | 1,153 |  |  | 1,808 |
Other |  | 941 |  |  | 1,884 |
Total deferred tax liabilities |  | 6,048 |  |  | 10,127 |
Net deferred tax liabilities |  | $ | 1,952 |  |  | $ | 2,768 |
The deferred taxes noted above are classified as follows in the Company's Consolidated Balance Sheets:
|  | January 31,
(Amounts in millions) |  | 2018 |  | 2017
Balance Sheet classification |  |  |  |
Assets: |  |  |  |
Other assets and deferred charges |  | $ | 1,879 |  |  | $ | 1,565 |
Liabilities: |  |  |  |
Deferred income taxes and other |  | 3,831 |  |  | 4,333 |
Net deferred tax liabilities |  | $ | 1,952 |  |  | $ | 2,768 |
Unremitted Earnings The Company has previously asserted all of its unremitted earnings offshore were permanently reinvested. Accordingly, the Company did not record any deferred taxes related to any outside basis differences associated with its foreign subsidiaries. As part of the tax reform enacted on December 22, 2017, the Company is currently assessing the impact of the new legislation, which can in turn, impact its assertion regarding any potential future repatriation. After consideration of the provisional transition tax calculation and deemed repatriation of the previously unremitted earnings, the Company is estimating, on a provisional basis, its outside tax basis exceeds the outside book basis of its foreign subsidiaries by approximately $10.0 billion. Once the calculations are completed regarding the transition tax, taking into account the timeline provided in SAB 118, the Company will provide updated disclosures regarding any potential changes for its previous assertions. Net Operating Losses, Tax Credit Carryforwards and Valuation Allowances At January 31, 2018, the Company had net operating loss and capital loss carryforwards totaling approximately $6.7 billion. Of these carryforwards, approximately $3.6 billion will expire, if not utilized, in various years through 2038. The remaining carryforwards have no expiration. At January 31, 2018, the Company's provisional transition tax calculation fully utilized all foreign tax credit carryforwards. The recoverability of these future tax deductions and credits is evaluated by assessing the adequacy of future expected taxable income from all sources, including taxable income in prior carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. To the extent the Company does not consider it more likely than not that a deferred tax asset will be recovered, a valuation allowance is established. To the extent that a valuation allowance has been established and it is subsequently determined that it is more likely than not that the deferred tax assets will be recovered, the valuation allowance will be released. The Company had valuation allowances of approximately $1.8 billion and $1.5 billion as of January 31, 2018 and 2017, respectively, on deferred tax assets associated primarily with net operating loss carryforwards for which management has determined it is more likely than not that the deferred tax asset will not be realized. Net activity in the valuation allowance during fiscal 2018 related to releases arising from the use of deferred tax assets, changes in judgment regarding the future realization of deferred tax assets, increases from certain net operating losses and deductible temporary differences arising in fiscal 2018, decreases due to operating loss expirations and fluctuations in currency exchange rates. Management believes that it is more likely than not that the remaining deferred tax assets will be fully realized. Uncertain Tax Positions The benefits of uncertain tax positions are recorded in the Company's Consolidated Financial Statements only after determining a more-likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. As of January 31, 2018 and 2017, the amount of unrecognized tax benefits related to continuing operations was $1.0 billion and $1.1 billion, respectively. The amount of unrecognized tax benefits that would affect the Company's effective income tax rate was $690 million and $703 million as of January 31, 2018 and 2017, respectively. A reconciliation of unrecognized tax benefits from continuing operations is as follows:
| Fiscal Years Ended January 31,
(Amounts in millions) | 2018 |  | 2017 |  | 2016
Unrecognized tax benefits, beginning of year | $ | 1,050 |  |  | $ | 607 |  |  | $ | 838 |
Increases related to prior year tax positions | 130 |  |  | 388 |  |  | 164 |
Decreases related to prior year tax positions | (254 | ) |  | (32 | ) |  | (446 | )
Increases related to current year tax positions | 122 |  |  | 145 |  |  | 119 |
Settlements during the period | (23 | ) |  | (46 | ) |  | (25 | )
Lapse in statutes of limitations | (15 | ) |  | (12 | ) |  | (43 | )
Unrecognized tax benefits, end of year | $ | 1,010 |  |  | $ | 1,050 |  |  | $ | 607 |
The Company classifies interest and penalties related to uncertain tax benefits as interest expense and as operating, selling, general and administrative expenses, respectively. During fiscal 2018, 2017 and 2016, the Company recognized interest expense related to uncertain tax positions of $32 million, $35 million and $5 million, respectively. As of January 31, 2018 and 2017, accrued interest related to uncertain tax positions of $96 million and $72 million, respectively, was recorded in the Company's Consolidated Balance Sheets. As of January 31, 2018, accrued penalties related to uncertain tax positions of $12 million were recorded in the Company's Consolidated Balance Sheets. As of January 31, 2017, there were no accrued penalties related to uncertain tax positions recorded in the Company's Consolidated Balance Sheets. During the next twelve months, it is reasonably possible that tax audit resolutions could reduce unrecognized tax benefits by between $50 million and $400 million, either because the tax positions are sustained on audit or because the Company agrees to their disallowance. The Company is focused on resolving tax audits as expeditiously as possible. As a result of these efforts, unrecognized tax benefits could potentially be reduced beyond the provided range during the next twelve months. The Company does not expect any change to have a material impact to its Consolidated Financial Statements. The Company remains subject to income tax examinations for its U.S. federal income taxes generally for fiscal 2013 through 2018. The Company also remains subject to income tax examinations for international income taxes for fiscal 2011 through 2018, and for U.S. state and local income taxes generally for the fiscal years ended 2013 through 2018. Other Taxes The Company is subject to tax examinations for value added, sales-based, payroll and other non-income taxes. A number of these examinations are ongoing in various jurisdictions. In certain cases, the Company has received assessments from the respective taxing authorities in connection with these examinations. Unless otherwise indicated, the possible losses or range of possible losses associated with these matters are individually immaterial, but a group of related matters, if decided adversely to the Company, could result in a liability material to the Company's Consolidated Financial Statements. In particular, Brazil federal, state and local laws are complex and subject to varying interpretations, and the Company's subsidiaries in Brazil are party to a large number of non-income tax assessments. One of these interpretations common to the retail industry in Brazil relates to whether credits received from suppliers should be treated as a reduction of cost for purposes of calculating certain indirect taxes. The Company believes credits received from suppliers are reductions in cost and that it has substantial legal defenses in this matter and intends to defend this matter vigorously. As such, the Company has not accrued for this matter, although the Company may be required to deposit funds in escrow or secure financial guarantees to continue the judicial process in defending this matter in Brazil.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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