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Income Taxes | 12 Months Ended
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Feb. 03, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Current income tax expense represents the amounts expected to be reported on the Company’s income tax returns, and deferred tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized. On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was enacted into law. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The TCJA reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. This results in an effective statutory tax rate of 33.7% for the Company for the year ended February 3, 2018. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. The ultimate impact may differ from provisional amounts, due to changes in interpretations and assumptions the Company has made regarding application of the TCJA as well as additional regulatory guidance that may be issued. The Company has recognized the following provisional tax impacts and included these amounts in its consolidated financial statements for the year ended February 3, 2018. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the TCJA, the Company revalued its ending net deferred tax liabilities at February 3, 2018 and recognized a provisional $159 million tax benefit in the Company’s Consolidated Statement of Income for the year ended February 3, 2018. The TCJA provided for a one-time deemed mandatory repatriation of post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) determined as of December 31, 2017. The Company had an estimated $704 million of undistributed foreign E&P subject to the deemed mandatory repatriation and recognized a provisional $67 million of income tax expense in the Company’s Consolidated Statement of Income for the year ended February 3, 2018, which is payable over eight years. The amount payable in excess of one year, totaling $61 million, is included within Other Long-term Liabilities on the February 3, 2018 Consolidated Balance Sheet. Beginning in 2018, the TCJA includes a new global intangible low-taxed income (“GILTI”) provision that requires the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary's tangible assets. The Company has elected to account for GILTI tax in the period in which it is incurred, and therefore has not provided any deferred tax impacts of GILTI in its consolidated financial statements for the year ended February 3, 2018. The following table provides the components of the Company’s provision for income taxes for fiscal 2017, 2016 and 2015:
| 2017 |  | 2016 |  | 2015
| (in millions)
Current: |  |  |  |  |
U.S. Federal | $ | 366 |  |  | $ | 345 |  |  | $ | 553 |
U.S. State | 49 |  |  | 62 |  |  | 96 |
Non-U.S. | 22 |  |  | 21 |  |  | 21 |
Total | 437 |  |  | 428 |  |  | 670 |
Deferred: |  |  |  |  |
U.S. Federal | (114 | ) |  | 99 |  |  | 17 |
U.S. State | 6 |  |  | 8 |  |  | 6 |
Non-U.S. | — |  |  | 3 |  |  | (12 | )
Total | (108 | ) |  | 110 |  |  | 11 |
Provision for Income Taxes | $ | 329 |  |  | $ | 538 |  |  | $ | 681 |
The non-U.S. component of pre-tax income, arising principally from overseas operations, was income of $99 million, $134 million and $267 million for 2017, 2016 and 2015, respectively. The Company's income taxes payable reflects the tax effects from employee stock plan awards. For stock options, the taxes payable includes the tax effect of the difference between the fair market value of the stock at the time of grant and exercise. For restricted stock, the taxes payable includes the tax effect of the difference between the fair market value of the stock at the time of grant and vesting. In the first quarter of 2017, the Company adopted the new share-based compensation standard that requires prospective recognition of excess tax effects in the income statement when awards vest or are exercised. As a result, a tax benefit of $13 million was recognized in the income tax provision for the year ended February 3, 2018. The Company had net excess tax benefits from equity awards of $42 million and $70 million in 2016 and 2015, respectively, which were reflected as increases to equity. The following table provides the reconciliation between the statutory federal income tax rate and the effective tax rate for fiscal 2017, 2016 and 2015:
| 2017 |  | 2016 |  | 2015
Federal Income Tax Rate | 33.7 | % |  | 35.0 | % |  | 35.0 | %
State Income Taxes, Net of Federal Income Tax Effect | 3.6 | % |  | 3.4 | % |  | 3.4 | %
Impact of Non-U.S. Operations | (1.5 | )% |  | (1.2 | )% |  | (1.7 | )%
U.S. Net Deferred Tax Liability Remeasurement | (12.1 | )% |  | — | % |  | — | %
Deemed Mandatory Repatriation | 5.1 | % |  | — | % |  | — | %
Share-Based Compensation | (1.0 | )% |  | — | % |  | — | %
Foreign Portion of the Divestiture of Third-party Apparel Sourcing Business | — | % |  | — | % |  | (0.9 | )%
Resolution of Certain Tax Matters | (0.9 | )% |  | (4.0 | )% |  | — | %
Other Items, Net | (1.8 | )% |  | (1.5 | )% |  | (0.6 | )%
Effective Tax Rate | 25.1 | % |  | 31.7 | % |  | 35.2 | %
Deferred Taxes The following table provides the effect of temporary differences that cause deferred income taxes as of February 3, 2018 and January 28, 2017. Deferred tax assets and liabilities represent the future effects on income taxes resulting from temporary differences and carryforwards at the end of the respective year.
| February 3, 2018 |  | January 28, 2017
| Assets |  | Liabilities |  | Total |  | Assets |  | Liabilities |  | Total
| (in millions)
Leases | $ | 47 |  |  | $ | — |  |  | $ | 47 |  |  | $ | 68 |  |  | $ | — |  |  | $ | 68 |
Non-qualified Retirement Plan | 62 |  |  | — |  |  | 62 |  |  | 96 |  |  | — |  |  | 96 |
Property and Equipment | — |  |  | (266 | ) |  | (266 | ) |  | — |  |  | (413 | ) |  | (413 | )
Goodwill | — |  |  | (10 | ) |  | (10 | ) |  | — |  |  | (15 | ) |  | (15 | )
Trade Names and Other Intangibles | — |  |  | (91 | ) |  | (91 | ) |  | — |  |  | (141 | ) |  | (141 | )
State Net Operating Loss Carryforwards | 14 |  |  | — |  |  | 14 |  |  | 15 |  |  | — |  |  | 15 |
Non-U.S. Operating Loss Carryforwards | 188 |  |  | — |  |  | 188 |  |  | 155 |  |  | — |  |  | 155 |
Valuation Allowance | (212 | ) |  | — |  |  | (212 | ) |  | (174 | ) |  | — |  |  | (174 | )
Other, Net | 44 |  |  | — |  |  | 44 |  |  | 76 |  |  | — |  |  | 76 |
Total Deferred Income Taxes | $ | 143 |  |  | $ | (367 | ) |  | $ | (224 | ) |  | $ | 236 |  |  | $ | (569 | ) |  | $ | (333 | )
As of February 3, 2018, the Company had available for state income tax purposes net operating loss carryforwards which expire, if unused, in the years 2018 through 2037. For those states where the Company has determined that it is more likely than not that the state net operating loss carryforwards will not be realized, a valuation allowance has been provided. As of February 3, 2018, the Company had available for non-U.S. tax purposes net operating loss carryforwards which expire, if unused, in the years 2028 through 2036. For certain jurisdictions where the Company has determined that it is more likely than not that the net operating loss carryforwards will not be realized, a valuation allowance has been provided on those net operating loss carryforwards as well as other net deferred tax assets. Income tax payments were $494 million for 2017, $469 million for 2016 and $507 million for 2015. Uncertain Tax Positions The following table summarizes the activity related to the Company’s unrecognized tax benefits for U.S. federal, state & non-U.S. tax jurisdictions for 2017, 2016 and 2015, without interest and penalties:
| 2017 |  | 2016 |  | 2015
| (in millions)
Gross Unrecognized Tax Benefits, as of the Beginning of the Fiscal Year | $ | 90 |  |  | $ | 248 |  |  | $ | 193 |
Increases in Unrecognized Tax Benefits for Prior Years | 3 |  |  | 3 |  |  | 8 |
Decreases in Unrecognized Tax Benefits for Prior Years | (22 | ) |  | (73 | ) |  | (3 | )
Increases in Unrecognized Tax Benefits as a Result of Current Year Activity | 7 |  |  | 18 |  |  | 54 |
Decreases to Unrecognized Tax Benefits Relating to Settlements with Taxing Authorities | (2 | ) |  | (98 | ) |  | — |
Decreases to Unrecognized Tax Benefits as a Result of a Lapse of the Applicable Statute of Limitations | (9 | ) |  | (8 | ) |  | (4 | )
Gross Unrecognized Tax Benefits, as of the End of the Fiscal Year | $ | 67 |  |  | $ | 90 |  |  | $ | 248 |
Of the $67 million, $90 million and $248 million of total unrecognized tax benefits at February 3, 2018, January 28, 2017, and January 30, 2016, respectively, approximately $46 million, $62 million and $217 million, respectively, represent the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods. These amounts are net of the offsetting tax effects from other tax jurisdictions. Of the total unrecognized tax benefits, it is reasonably possible that $12 million could change in the next 12 months due to audit settlements, expiration of statute of limitations or other resolution of uncertainties. Due to the uncertain and complex application of tax regulations, it is possible that the ultimate resolution of audits may result in amounts which could be different from this estimate. In such case, the Company will record additional tax expense or tax benefit in the period in which such matters are effectively settled. The Company recognizes interest and penalties related to unrecognized tax benefits as components of income tax expense. The Company recognized interest and penalties expense (benefit) of $(2) million, $(3) million and $7 million in 2017, 2016 and 2015, respectively. The Company has accrued $17 million and $20 million for the payment of interest and penalties as of February 3, 2018 and January 28, 2017, respectively. Accrued interest and penalties are included within Other Long-term Liabilities on the Consolidated Balance Sheets. The Company files U.S. federal income tax returns as well as income tax returns in various states and in non-U.S. jurisdictions. The Company is a participant in the Compliance Assurance Process ("CAP"), which is a program made available by the Internal Revenue Service ("IRS") to certain qualifying large taxpayers, under which participants work collaboratively with the IRS to identify and resolve potential tax issues through open, cooperative and transparent interaction prior to the annual filing of their federal income tax return. The IRS is currently examining the Company's 2016 consolidated U.S. federal income tax return. The Company is also subject to various U.S. state and local income tax examinations for the years 2010 to 2016. Finally, the Company is subject to multiple non-U.S. tax jurisdiction examinations for the years 2007 to 2016. In some situations, the Company determines that it does not have a filing requirement in a particular tax jurisdiction. Where no return has been filed, no statute of limitations applies. Accordingly, if a tax jurisdiction reaches a conclusion that a filing requirement does exist, additional years may be reviewed by the tax authority. The Company believes it has appropriately accounted for uncertainties related to this issue.

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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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