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Income Taxes | 12 Months Ended
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Aug. 28, 2021
Income Taxes |
Income Taxes | Note D – Income Taxes The components of income from continuing operations before income taxes are as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | Year Ended
​ | ​ | August 28, | ​ | August 29, | ​ | August 31,
(in thousands) | ​ | 2021 | ​ | 2020 | ​ | 2019
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Domestic | ​ | $ | 2,436,548 | ​ | $ | 1,960,320 | ​ | $ | 1,745,625
International | ​ |  | 312,642 | ​ |  | 256,194 | ​ |  | 285,708
​ | ​ | $ | 2,749,190 | ​ | $ | 2,216,514 |  | $ | 2,031,333
​ The provision for income tax expense consisted of the following:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended
​ | ​ | August 28, | ​ | August 29, | ​ | August 31,
(in thousands) |  | 2021 | ​ | 2020 | ​ | 2019
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current: |  | ​ |  |  | ​ |  |  | ​ |
Federal | ​ | $ | 438,686 | ​ | $ | 324,156 | ​ | $ | 274,504
State | ​ |  | 79,271 | ​ |  | 47,880 | ​ |  | 45,457
International | ​ |  | 95,351 | ​ |  | 60,429 | ​ |  | 59,100
​ | ​ |  | 613,308 | ​ |  | 432,465 | ​ |  | 379,061
Deferred: | ​ |  |  | ​ |  |  | ​ |  |
Federal | ​ |  | (21,366) | ​ |  | 43,706 | ​ |  | 25,757
State | ​ |  | (1,707) | ​ |  | 12,544 | ​ |  | 6,914
International | ​ |  | (11,359) | ​ |  | (5,173) | ​ |  | 2,380
​ | ​ |  | (34,432) | ​ |  | 51,077 | ​ |  | 35,051
Income tax expense | ​ | $ | 578,876 | ​ | $ | 483,542 | ​ | $ | 414,112
​ A reconciliation of the provision for income taxes to the amount computed by applying the federal statutory tax rate to income before income taxes is as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended
​ |  | August 28, | ​ | August 29, | ​ | August 31, | ​
(in thousands) | ​ | 2021 | ​ | 2020 | ​ | 2019 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ |
Federal tax at statutory U.S. income tax rate |  | 21.0 | % | 21.0 | % | 21.0 | %
State income taxes, net |  | 2.2 | % | 2.2 | % | 2.0 | %
Share-based compensation |  | (1.7) | % | (0.7) | % | (1.8) | %
Impact of tax reform |  | — | ​ | — | ​ | (0.4) | %
Global intangible lower-taxed income ("GILTI") | ​ | 0.8 | % | 1.0 | % | 1.3 | %
Foreign Tax Credits | ​ | (1.7) | % | (1.1) | % | (1.1) | %
Other |  | 0.5 | % | (0.6) | % | (0.6) | %
Effective tax rate |  | 21.1 | % | 21.8 | % | 20.4 | %
​ For the year ended August 28, 2021, August 29, 2020, and August 31, 2019, the Company recognized excess tax benefits from stock option exercises of $56.4 million, $20.9 million, and $46.0 million, respectively. ​ Beginning with the year ended August 31, 2019, the Company is subject to a new tax on global intangible low-taxed income (“GILTI”) which is imposed on foreign earnings. The Company has made the election to record this tax as a period cost, thus has not adjusted the deferred tax assets or liabilities of its foreign subsidiaries for the new tax. Net impacts for GILTI are included in the provision for income taxes for the years ending August 28, 2021, August 29, 2020 and August 31, 2019. ​ Significant components of the Company's deferred tax assets and liabilities were as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | August 28, |  | August 29,
(in thousands) | ​ | 2021 | ​ | 2020
​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax assets: |  | ​ |  |  | ​ |
Net operating loss and credit carryforwards | ​ | $ | 41,825 | ​ | $ | 41,437
Accrued benefits | ​ |  | 126,086 | ​ |  | 88,226
Operating lease liabilities | ​ | ​ | 646,938 | ​ | ​ | 617,002
Other | ​ |  | 69,340 | ​ |  | 69,788
Total deferred tax assets | ​ |  | 884,189 | ​ |  | 816,453
Valuation allowances | ​ |  | (31,098) | ​ |  | (28,373)
Net deferred tax assets | ​ |  | 853,091 | ​ |  | 788,080
​ | ​ | ​ | ​ | ​ | ​ | ​
Deferred tax liabilities: | ​ |  |  | ​ |  |
Property and equipment | ​ |  | (185,985) | ​ |  | (173,696)
Inventory | ​ |  | (316,736) | ​ |  | (298,585)
Prepaid expenses | ​ |  | (28,676) | ​ |  | (55,827)
Operating lease assets | ​ | ​ | (609,336) | ​ | ​ | (581,381)
Other | ​ |  | (8,440) | ​ |  | (4,934)
Deferred tax liabilities | ​ |  | (1,149,173) | ​ |  | (1,114,423)
​ | ​ | ​ | ​ | ​ | ​ | ​
Net deferred tax liabilities | ​ | $ | (296,082) | ​ | $ | (326,343)
​ | ​ | ​ | ​ | ​ | ​ | ​
​ For the year ended August 31, 2019, the Company held the assertion, with few exceptions, that current and accumulated earnings from foreign operations were not indefinitely reinvested. During the year ended August 29, 2020, the Company asserted indefinite reinvestment for basis differences and accumulated earnings through fiscal 2020 with respect to its foreign subsidiaries. For the year ended August 28, 2021, the Company does not assert permanent reinvestment of current year earnings with respect to its Mexican subsidiaries while maintaining its assertion of indefinite reinvestment of earnings of other foreign subsidiaries. Where necessary, taxes resulting from foreign distributions of current and accumulated earnings (e.g., withholding taxes) have been considered in the Company’s provision for income taxes. ​ As of August 28, 2021, we have not recorded incremental income taxes for outside basis differences of $443.3 million in our investments in foreign subsidiaries, as these amounts are indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to the outside basis differences in these entities is not practicable. ​ At August 28, 2021 and August 29, 2020, the Company had net operating loss (“NOL”) carryforwards totaling $259.1 million ($35.9 million tax effected) and $247.1 million ($32.2 million tax effected), respectively. Certain NOLs have no expiration date and others will expire, if not utilized, in various years from fiscal 2022 through 2041. At August 28, 2021 and August 29, 2020, the Company had deferred tax assets for income tax credit carryforwards of $6.0 and $9.2 million, respectively. Income tax credit carryforwards will expire, if not utilized, in various years from fiscal 2022 through 2037. ​ At August 28, 2021 and August 29, 2020, the Company had a valuation allowance of $31.1 million and $28.4 million, respectively, on deferred tax assets associated with NOL and tax credit carryforwards for which management has determined it is more likely than not that the deferred tax asset will not be realized. Management believes it is more likely than not that the remaining deferred tax assets will be fully realized. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
​ | ​ | ​ | ​ | ​ | ​ | ​
​ |  | August 28, |  | August 29,
(in thousands) | ​ | 2021 | ​ | 2020
​ | ​ | ​ | ​ | ​ | ​ | ​
Beginning balance | ​ | $ | 31,942 | ​ | $ | 30,892
Additions based on tax positions related to the current year | ​ |  | 10,806 | ​ |  | 8,512
Additions for tax positions of prior years | ​ |  | 4,009 | ​ |  | 946
Reductions for tax positions of prior years | ​ |  | (886) | ​ |  | (4,124)
Reductions due to settlements | ​ |  | (2,204) | ​ |  | —
Reductions due to statute of limitations | ​ |  | (3,870) | ​ |  | (4,284)
​ | ​ | ​ | ​ | ​ | ​ | ​
Ending balance | ​ | $ | 39,797 | ​ | $ | 31,942
​ Included in the August 28, 2021 and the August 29, 2020 balances are $25.8 million and $18.9 million, respectively, of unrecognized tax benefits that, if recognized, would reduce the Company’s effective tax rate. The balances above also include amounts of $10.4 million and $10.5 million for August 28, 2021 and the August 29, 2020, respectively, that are accounted for as reductions to deferred tax assets for NOL carryforwards and tax credit carryforwards. It is anticipated that in the event the associated uncertain tax positions are disallowed, the NOL carryforwards and tax credit carryforwards would be utilized to settle the liability. ​ The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. The Company had $2.4 million and $1.6 million accrued for the payment of interest and penalties associated with unrecognized tax benefits at August 28, 2021 and August 29, 2020, respectively. ​ The Company files U.S. federal, U.S. state and local, and international income tax returns. With few exceptions, the Company is no longer subject to U.S. federal, U.S. state and local, or Non-U.S. examinations by tax authorities for fiscal year 2016 and prior. The Company is typically engaged in various tax examinations at any given time by U.S. federal, U.S. state and local, and Non-U.S. taxing jurisdictions. As of August 28, 2021, the Company estimates that the amount of unrecognized tax benefits could be reduced by approximately $2.2 million over the next twelve months as a result of tax audit settlements. While the Company believes that it is adequately accrued for possible audit adjustments, the final resolution of these examinations cannot be determined at this time and could result in final settlements that differ from current estimates. ​

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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