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Income Taxes | 12 Months Ended
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Jan. 30, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The following is a reconciliation of the federal statutory income tax rate to income tax expense in fiscal 2016, 2015 and 2014 ($ in millions):
| 2016 |  | 2015 |  | 2014
Federal income tax at the statutory rate | $ | 458 |  |  | $ | 485 |  |  | $ | 379 |
State income taxes, net of federal benefit | 38 |  |  | 43 |  |  | 26 |
(Benefit) expense from foreign operations | 5 |  |  | (23 | ) |  | (23 | )
Other | 2 |  |  | (11 | ) |  | 6 |
Legal entity reorganization | — |  |  | (353 | ) |  | — |
Income tax expense | $ | 503 |  |  | $ | 141 |  |  | $ | 388 |
Effective income tax rate | 38.4 | % |  | 10.1 | % |  | 35.8 | %
Legal Entity Reorganization In the fourth quarter of fiscal 2012, we purchased CPW’s interest in the Best Buy Mobile profit share agreement for $1.3 billion (the “Mobile buy-out”). The Mobile buy-out completed by our U.K. subsidiary resulted in the $1.3 billion purchase price being assigned, for U.S. tax purposes only, to an intangible asset. The Mobile buy-out did not, however, result in a similar intangible asset in the U.K., as the Mobile buy-out was considered part of a tax-free equity transaction for U.K. tax purposes. Because the U.S. tax basis in the intangible asset was considered under U.S. tax law to be held by our U.K. subsidiary, which was regarded as a foreign corporation for U.S. tax purposes, ASC 740, Income Taxes, requires that no deferred tax asset may be recorded in respect of the intangible asset. ASC 740-30-25-9 also precludes the recording of a deferred tax asset on the outside basis difference of the U.K. subsidiary. As a result, the amortization of the U.S. tax basis in the intangible asset only resulted in a periodic income tax benefit by reducing the amount of the U.K. subsidiary’s income, if any, that would otherwise have been subject to U.S. income taxes. In the first quarter of fiscal 2015, we filed an election with the Internal Revenue Service to treat the U.K. subsidiary as a disregarded entity such that its assets are now deemed to be assets held directly by a U.S. entity for U.S. tax purposes. This tax-only election, which resulted in the liquidation of the U.K. subsidiary for U.S. tax purposes, resulted in the elimination of the Company’s outside basis difference in the U.K. subsidiary. Additionally, the election resulted in the recognition of a deferred tax asset (and corresponding income tax benefit) for the remaining unrecognized inside tax basis in the intangible, in a manner similar to a change in tax status as provided in ASC 740-10-25-32. Earnings from continuing operations before income tax expense by jurisdiction was as follows in fiscal 2016, 2015 and 2014 ($ in millions):
| 2016 |  | 2015 |  | 2014
United States | $ | 1,310 |  |  | $ | 1,201 |  |  | $ | 699 |
Outside the United States | — |  |  | 186 |  |  | 384 |
Earnings from continuing operations before income tax expense | $ | 1,310 |  |  | $ | 1,387 |  |  | $ | 1,083 |
Income tax expense was comprised of the following in fiscal 2016, 2015 and 2014 ($ in millions):
| 2016 |  | 2015 |  | 2014
Current: |  |  |  |  |
Federal | $ | 347 |  |  | $ | 354 |  |  | $ | 305 |
State | 48 |  |  | 51 |  |  | 46 |
Foreign | 60 |  |  | 33 |  |  | 55 |
| 455 |  |  | 438 |  |  | 406 |
Deferred: |  |  |  |  |
Federal | 65 |  |  | (275 | ) |  | (22 | )
State | 10 |  |  | (26 | ) |  | 1 |
Foreign | (27 | ) |  | 4 |  |  | 3 |
| 48 |  |  | (297 | ) |  | (18 | )
Income tax expense | $ | 503 |  |  | $ | 141 |  |  | $ | 388 |
Deferred taxes are the result of differences between the bases of assets and liabilities for financial reporting and income tax purposes. Deferred tax assets and liabilities were comprised of the following ($ in millions):
| January 30, 2016 |  | January 31, 2015
Accrued property expenses | $ | 175 |  |  | $ | 129 |
Other accrued expenses | 78 |  |  | 91 |
Deferred revenue | 99 |  |  | 93 |
Compensation and benefits | 99 |  |  | 103 |
Stock-based compensation | 86 |  |  | 94 |
Goodwill and intangibles | 253 |  |  | 287 |
Loss and credit carryforwards | 133 |  |  | 156 |
Other | 86 |  |  | 88 |
Total deferred tax assets | 1,009 |  |  | 1,041 |
Valuation allowance | (108 | ) |  | (143 | )
Total deferred tax assets after valuation allowance | 901 |  |  | 898 |
Property and equipment | (296 | ) |  | (251 | )
Inventory | (69 | ) |  | (54 | )
Other | (26 | ) |  | (27 | )
Total deferred tax liabilities | (391 | ) |  | (332 | )
Net deferred tax assets | $ | 510 |  |  | $ | 566 |
Deferred tax assets and liabilities included in our Consolidated Balance Sheets were as follows ($ in millions):
| January 30, 2016 |  | January 31, 2015
Other assets | $ | 510 |  |  | $ | 574 |
Long-term liabilities held for sale | — |  |  | (8 | )
Net deferred tax assets | $ | 510 |  |  | $ | 566 |
During the fourth quarter of fiscal 2016, we early adopted ASU 2015-17, which requires that all deferred taxes be presented as non-current on the Consolidated Balance Sheet. Refer to Note 1, Summary of Significant Accounting Policies, for further information regarding this balance sheet reclassification. At January 30, 2016, we had total net operating loss carryforwards from international operations of $96 million, of which $89 million will expire in various years through 2036 and the remaining amounts have no expiration. Additionally, we had acquired U.S. federal net operating loss carryforwards of $19 million which expire between 2023 and 2030, U.S. federal foreign tax credit carryforwards of $1 million which expire between 2023 and 2026, state credit carryforwards of $13 million which expire in 2024, and state capital loss carryforwards of $4 million which expire in 2019. At January 30, 2016, a valuation allowance of $108 million had been established, of which $1 million is against U.S. federal foreign tax credit carryforwards, $9 million is against U.S. federal and state capital loss carryforwards, $8 million is against state credit carryforwards and other state deferred tax assets, and $90 million is against certain international net operating loss carryforwards and other international deferred tax assets. The $35 million decrease from January 31, 2015, is primarily due to the decrease in the valuation allowance against international net operating loss carryforwards. We have not provided deferred taxes on unremitted earnings attributable to foreign operations that have been considered to be reinvested indefinitely. These earnings relate to ongoing operations and were $896 million at January 30, 2016. It is not practicable to determine the income tax liability that would be payable if such earnings were not indefinitely reinvested. The following table provides a reconciliation of changes in unrecognized tax benefits for fiscal 2016, 2015 and 2014 ($ in millions):
| 2016 |  | 2015 |  | 2014
Balance at beginning of period | $ | 410 |  |  | $ | 370 |  |  | $ | 383 |
Gross increases related to prior period tax positions | 30 |  |  | 33 |  |  | 38 |
Gross decreases related to prior period tax positions | (13 | ) |  | (88 | ) |  | (67 | )
Gross increases related to current period tax positions | 59 |  |  | 114 |  |  | 34 |
Settlements with taxing authorities | (9 | ) |  | (9 | ) |  | (3 | )
Lapse of statute of limitations | (8 | ) |  | (10 | ) |  | (15 | )
Balance at end of period | $ | 469 |  |  | $ | 410 |  |  | $ | 370 |
Unrecognized tax benefits of $337 million, $297 million and $228 million at January 30, 2016, January 31, 2015, and February 1, 2014, respectively, would favorably impact our effective income tax rate if recognized. We recognize interest and penalties (not included in the "unrecognized tax benefits" above), as well as interest received from favorable tax settlements, as components of income tax expense. Interest expense of $10 million was recognized in fiscal 2016. At January 30, 2016, January 31, 2015, and February 1, 2014, we had accrued interest of $89 million, $78 million and $91 million, respectively, along with accrued penalties of $1 million, $2 million and $2 million at January 30, 2016, January 31, 2015, and February 1, 2014, respectively. We file a consolidated U.S. federal income tax return, as well as income tax returns in various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before fiscal 2005. Because existing tax positions will continue to generate increased liabilities for us for unrecognized tax benefits over the next 12 months, and since we are routinely under audit by various taxing authorities, it is reasonably possible that the amount of unrecognized tax benefits will change during the next 12 months. An estimate of the amount or range of such change cannot be made at this time. However, we do not expect the change, if any, to have a material effect on our consolidated financial condition, results of operations or cash flows within the next 12 months.

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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 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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