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Income Taxes | 12 Months Ended
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Feb. 28, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES During fiscal 2021, new legislation was enacted to provide relief to businesses in response to the COVID-19 pandemic, including the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the Taxpayer Certainty and Disaster Tax Relief Act. On March 6, 2021 the American Rescue Plan Act of 2021 was enacted. We have evaluated the tax provisions of these acts as well as new IRS guidance issued. While the most significant impacts to the company include the employee retention tax credit and payroll tax deferral provisions of the CARES Act, we do not expect recent IRS guidance or the legislation to have a material impact on our results of operations. Income Tax Provision
| Years Ended February 28 or 29
(In thousands) | 2021 |  | 2020 |  | 2019
Current: |  |  |  |  |
Federal | $ | 209,447 |  |  | $ | 225,858 |  |  | $ | 218,497 |
State | 44,678 |  |  | 47,797 |  |  | 49,596 |
Total | 254,125 |  |  | 273,655 |  |  | 268,093 |
Deferred: |  |  |  |  |
Federal | (27,971) |  |  | 146 |  |  | 3,601 |
State | (7,816) |  |  | (1,248) |  |  | (1,301) |
Total | (35,787) |  |  | (1,102) |  |  | 2,300 |
Income tax provision | $ | 218,338 |  |  | $ | 272,553 |  |  | $ | 270,393 |
Effective Income Tax Rate Reconciliation
| Years Ended February 28 or 29
| 2021 |  | 2020 |  | 2019
Federal statutory income tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State and local income taxes, net of federal benefit | 3.3 |  |  | 3.4 |  |  | 3.4 |
2017 Tax Act | — |  |  | — |  |  | (0.1) |
Share-based compensation | (1.6) |  |  | (1.1) |  |  | (0.3) |
Nondeductible and other items | 0.5 |  |  | 0.7 |  |  | 0.7 |
Credits | (0.6) |  |  | (0.5) |  |  | (0.4) |
Effective income tax rate | 22.6 | % |  | 23.5 | % |  | 24.3 | %
Temporary Differences Resulting in Deferred Tax Assets and Liabilities
| As of February 28 or 29
(In thousands) | 2021 |  | 2020
Deferred tax assets: |  |  |
Accrued expenses and other | $ | 67,185 |  |  | $ | 39,576 |
Partnership basis (1) | 135,437 |  |  | 89,359 |
Operating lease liabilities | 115,583 |  |  | 119,558 |
Share-based compensation | 54,681 |  |  | 51,039 |
Derivatives | 9,317 |  |  | 10,346 |
Capital loss carry forward | 901 |  |  | 917 |
Total deferred tax assets | 383,104 |  |  | 310,795 |
Less: valuation allowance | (901) |  |  | (917) |
Total deferred tax assets after valuation allowance | 382,203 |  |  | 309,878 |
Deferred tax liabilities: |  |  |
Prepaid expenses | 21,302 |  |  | 19,742 |
Property and equipment | 75,383 |  |  | 67,589 |
Operating lease assets | 110,006 |  |  | 114,212 |
Inventory | 11,251 |  |  | 18,493 |
Total deferred tax liabilities | 217,942 |  |  | 220,036 |
Net deferred tax asset | $ | 164,261 |  |  | $ | 89,842 |
(1) As discussed in Note 1(X), we adopted CECL during the first quarter of fiscal 2021. This adoption resulted in the recognition of a $48.7 million increase in net deferred tax assets as of March 1, 2020. Except for amounts for which a valuation allowance has been provided, we believe it is more likely than not that the results of future operations and the reversals of existing deferred taxable temporary differences will generate sufficient taxable income to realize the deferred tax assets. The valuation allowance as of February 28, 2021, relates to capital loss carryforwards that are not more likely than not to be utilized prior to their expiration. Reconciliation of Unrecognized Tax Benefits
| Years Ended February 28 or 29
(In thousands) | 2021 |  | 2020 |  | 2019
Balance at beginning of year | $ | 30,865 |  |  | $ | 30,270 |  |  | $ | 28,685 |
Increases for tax positions of prior years | 188 |  |  | 3,493 |  |  | 2,035 |
Decreases for tax positions of prior years | (4,468) |  |  | (2,913) |  |  | (266) |
Increases based on tax positions related to the current year | 3,634 |  |  | 4,170 |  |  | 2,498 |
Settlements | (4) |  |  | (326) |  |  | (44) |
Lapse of statute | (1,218) |  |  | (3,829) |  |  | (2,638) |
Balance at end of year | $ | 28,997 |  |  | $ | 30,865 |  |  | $ | 30,270 |
As of February 28, 2021, we had $29.0 million of gross unrecognized tax benefits, $7.6 million of which, if recognized, would affect our effective tax rate. It is reasonably possible that the amount of the unrecognized tax benefit will increase or decrease during the next 12 months; however, we do not expect the change to have a significant effect on our results of operations, financial condition or cash flows. As of February 29, 2020, we had $30.9 million of gross unrecognized tax benefits, $9.2 million of which, if recognized, would affect our effective tax rate. As of February 28, 2019, we had $30.3 million of gross unrecognized tax benefits, $10.7 million of which, if recognized, would affect our effective tax rate. Our continuing practice is to recognize interest and penalties related to income tax matters in SG&A expenses. Our accrual for interest and penalties was $4.7 million, $4.0 million and $3.2 million as of February 28, 2021, February 29, 2020 and February 28, 2019, respectively. CarMax is subject to U.S. federal income tax as well as income tax of multiple states and local jurisdictions. With a few insignificant exceptions, we are no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to fiscal 2016.

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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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