XML 24 R12.htm IDEA: XBRL DOCUMENT
v3.20.1

Income Taxes | 12 Months Ended
--- | ---
Feb. 02, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Tax Reform On December 22, 2017, the U.S. enacted comprehensive tax legislation with the Tax Act, making broad and complex changes to U.S. tax law, including lowering the U.S. corporate income tax rate to 21%, transitioning to a modified territorial system, and providing for current expensing of certain qualifying capital expenditures. We have elected to pay our transition tax over the eight-year period provided in the Tax Act. As of February 2, 2020, the remaining balance of our transition tax obligation was $14 million. The Tax Act also created a new requirement that certain income (referred to as global intangible low-taxed income or “GILTI”) earned by controlled foreign corporations, or CFCs, must be included currently in the gross income of the CFCs’ U.S. shareholder. We have elected to account for GILTI in the period the tax is incurred; as such, the Company has not recorded any GILTI-related deferred taxes. We expect additional regulatory guidance and technical clarifications from the U.S. Department of the Treasury and IRS clarifying certain provisions of the Tax Act within the next 12 months. When additional guidance is issued, we will recognize the related tax impact in the quarter of enactment. Provision for Income Taxes Our earnings before the provision for income taxes follow:
in millions | Fiscal |  | Fiscal |  | Fiscal
2019 |  | 2018 |  | 2017
U.S. | $ | 13,770 |  |  | $ | 13,456 |  |  | $ | 12,682 |
Foreign | 945 |  |  | 1,100 |  |  | 1,016 |
Total | $ | 14,715 |  |  | $ | 14,556 |  |  | $ | 13,698 |
Our provision for income taxes follows:
in millions | Fiscal |  | Fiscal |  | Fiscal
2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
Federal | $ | 2,370 |  |  | $ | 2,495 |  |  | $ | 4,128 |
State | 572 |  |  | 544 |  |  | 499 |
Foreign | 340 |  |  | 372 |  |  | 331 |
Total current | 3,282 |  |  | 3,411 |  |  | 4,958 |
Deferred: |  |  |  |  |
Federal | 259 |  |  | 67 |  |  | (67 | )
State | (72 | ) |  | 1 |  |  | 89 |
Foreign | 4 |  |  | (44 | ) |  | 88 |
Total deferred | 191 |  |  | 24 |  |  | 110 |
Provision for income taxes | $ | 3,473 |  |  | $ | 3,435 |  |  | $ | 5,068 |
Our combined federal, state, and foreign effective tax rates follow:
| Fiscal |  | Fiscal |  | Fiscal
| 2019 |  | 2018 |  | 2017
Combined federal, state, and foreign effective tax rates | 23.6 | % |  | 23.6 | % |  | 37.0 | %
The reconciliation of our provision for income taxes at the federal statutory rates of 21% for fiscal 2019, 21% for fiscal 2018, and approximately 34% for fiscal 2017 to the actual tax expense follows:
in millions | Fiscal |  | Fiscal |  | Fiscal
2019 |  | 2018 |  | 2017
Income taxes at federal statutory rate | $ | 3,090 |  |  | $ | 3,057 |  |  | $ | 4,648 |
State income taxes, net of federal income tax benefit | 395 |  |  | 443 |  |  | 369 |
Tax on mandatory deemed repatriation | — |  |  | (62 | ) |  | 400 |
Other, net | (12 | ) |  | (3 | ) |  | (349 | )
Total | $ | 3,473 |  |  | $ | 3,435 |  |  | $ | 5,068 |
Deferred Taxes The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and deferred tax liabilities follow:
in millions | February 2, 2020 |  | February 3, 2019
Assets: |  |  |
Deferred compensation | $ | 169 |  |  | $ | 183 |
Accrued self-insurance liabilities | 285 |  |  | 298 |
State income taxes | 100 |  |  | 96 |
Non-deductible reserves | 156 |  |  | 231 |
Net operating losses | 70 |  |  | 17 |
Lease liabilities | 1,536 |  |  | — |
Other | 135 |  |  | 116 |
Total deferred tax assets | 2,451 |  |  | 941 |
Valuation allowance | — |  |  | — |
Total deferred tax assets after valuation allowance | 2,451 |  |  | 941 |
Liabilities: |  |  |
Merchandise inventories | (26 | ) |  | (9 | )
Property and equipment | (1,107 | ) |  | (893 | )
Goodwill and other intangibles | (195 | ) |  | (179 | )
Right-of-use assets | (1,458 | ) |  | — |
Other | (232 | ) |  | (230 | )
Total deferred tax liabilities | (3,018 | ) |  | (1,311 | )
Net deferred tax liabilities | $ | (567 | ) |  | $ | (370 | )
Our noncurrent deferred tax assets and noncurrent deferred tax liabilities, netted by tax jurisdiction, follow:
in millions | February 2, 2020 |  | February 3, 2019
Other assets | $ | 139 |  |  | $ | 121 |
Deferred income taxes | (706 | ) |  | (491 | )
Net deferred tax liabilities | $ | (567 | ) |  | $ | (370 | )
We believe that the realization of the deferred tax assets is more likely than not, based upon the expectation that we will generate the necessary taxable income in future periods. At February 2, 2020, we had federal, state, and foreign net operating loss carryforwards available to reduce future taxable income, expiring at various dates beginning in 2020 to 2038. We have concluded that it is more likely than not that the tax benefits related to the federal, state, and foreign net operating losses will be realized. Reinvestment of Unremitted Earnings Substantially all of our current year foreign cash flows in excess of working capital and cash needed for strategic investments are not intended to be indefinitely reinvested offshore. Therefore, the tax effects of repatriation (including applicable state and local taxes and foreign withholding taxes) of such cash flows have been provided for in the accompanying consolidated statements of earnings. We intend to reinvest substantially all of the approximately $3 billion of non-cash unremitted earnings of our non-U.S. subsidiaries indefinitely. Accordingly, no provision for state and local taxes or foreign withholding taxes was recorded on these unremitted earnings in the accompanying consolidated statements of earnings. It is impracticable for us to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings due to the complexities associated with the hypothetical calculation. Tax Return Examination Status Our income tax returns are routinely examined by U.S. federal, state and local, and foreign tax authorities. With few exceptions, as of February 2, 2020, the Company is no longer subject to U.S. federal examinations by tax authorities for years before fiscal 2010. Our U.S. federal tax returns for fiscal years 2010 through 2014 and 2016 to 2018 are currently under examination by the IRS. With respect to the fiscal years 2010 to 2014, the IRS has issued a proposed adjustment relating to transfer pricing between our entities in the U.S. and China. We are defending our position using all available remedies including bi-lateral relief. There are also ongoing U.S. state and local audits and other foreign audits covering fiscal years 2007 through 2018. We do not expect the results from any ongoing income tax audit to have a material impact on our consolidated financial condition, results of operations, or cash flows. Over the next twelve months, it is reasonably possible that the resolution of federal and state tax examinations could reduce our unrecognized tax benefits by $25 million. Final settlement of these audit issues may result in payments that are more or less than this amount, but we do not anticipate the resolution of these matters will result in a material change to our consolidated financial condition or results of operations. Unrecognized Tax Benefits Reconciliations of the beginning and ending amount of our gross unrecognized tax benefits follow:
in millions | Fiscal |  | Fiscal |  | Fiscal
2019 |  | 2018 |  | 2017
Unrecognized tax benefits balance at beginning of fiscal year | $ | 494 |  |  | $ | 637 |  |  | $ | 659 |
Additions based on tax positions related to the current year | 96 |  |  | 91 |  |  | 74 |
Additions for tax positions of prior years | 82 |  |  | 100 |  |  | 15 |
Reductions for tax positions of prior years | (147 | ) |  | (245 | ) |  | (93 | )
Reductions due to settlements | (13 | ) |  | (66 | ) |  | (1 | )
Reductions due to lapse of statute of limitations | (39 | ) |  | (23 | ) |  | (17 | )
Unrecognized tax benefits balance at end of fiscal year | $ | 473 |  |  | $ | 494 |  |  | $ | 637 |
Unrecognized tax benefits that if recognized would affect our annual effective income tax rate on net earnings were $407 million at February 2, 2020; $398 million at February 3, 2019; and $483 million at January 28, 2018. Interest and Penalties Net adjustments to accruals for interest and penalties associated with uncertain tax positions resulted in a benefit of $14 million in fiscal 2019, a benefit of $33 million in fiscal 2018 and expenses of $24 million in fiscal 2017. Interest and penalties are included in interest expense and SG&A, respectively. Our total accrued interest and penalties follow:
in millions | February 2, 2020 |  | February 3, 2019
Total accrued interest and penalties | $ | 87 |  |  | $ | 101 |

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration