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Income Taxes | 12 Months Ended
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Jan. 29, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Income TaxesCurrent 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. The following table provides the components of the Company’s provision for income taxes for 2021, 2020 and 2019:
| 2021 |  | 2020 |  | 2019
| (in millions)
Current: |  |  |  |  |
U.S. Federal | $ | 249 |  |  | $ | 178 |  |  | $ | 116 |
U.S. State | 53 |  |  | 52 |  |  | 16 |
Non-U.S. | 4 |  |  | 10 |  |  | 5 |
Total | 306 |  |  | 240 |  |  | 137 |
Deferred: |  |  |  |  |
U.S. Federal | 24 |  |  | 6 |  |  | 11 |
U.S. State | 10 |  |  | 5 |  |  | 4 |
Non-U.S. | 8 |  |  | 6 |  |  | (4) |
Total | 42 |  |  | 17 |  |  | 11 |
Provision for Income Taxes | $ | 348 |  |  | $ | 257 |  |  | $ | 148 |
The non-U.S. component of pre-tax income, arising principally from overseas operations, was income of $110 million, $67 million and $29 million for 2021, 2020 and 2019, respectively. The following table provides the reconciliation between the statutory federal income tax rate and the effective tax rate for 2021, 2020 and 2019:
| 2021 |  | 2020 |  | 2019
Federal Income Tax Rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
State Income Taxes, Net of Federal Income Tax Effect | 4.2 | % |  | 4.9 | % |  | 5.0 | %
Impact of Non-U.S. Operations | 0.1 | % |  | 0.5 | % |  | (0.2 | %)
Share-based Compensation | (0.7 | %) |  | 0.7 | % |  | 1.3 | %
Uncertain Tax Positions | (0.5 | %) |  | (4.9 | %) |  | (3.7 | %)
Other Items, Net | 0.4 | % |  | 0.7 | % |  | 0.9 | %
Effective Tax Rate | 24.5 | % |  | 22.9 | % |  | 24.3 | %
Deferred Taxes The following table provides the effect of temporary differences that cause deferred income taxes as of January 29, 2022 and January 30, 2021. 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.
| January 29, 2022 |  | January 30, 2021
| Assets |  | Liabilities |  | Total |  | Assets |  | Liabilities |  | Total
| (in millions)
Loss Carryforwards | $ | 405 |  |  | $ | — |  |  | $ | 405 |  |  | $ | 403 |  |  | $ | — |  |  | $ | 403 |
Non-qualified Retirement Plan | — |  |  | — |  |  | — |  |  | 22 |  |  | (2) |  |  | 20 |
Leases | 264 |  |  | (251) |  |  | 13 |  |  | 259 |  |  | (247) |  |  | 12 |
Share-based Compensation | 8 |  |  | — |  |  | 8 |  |  | 17 |  |  | — |  |  | 17 |
Property and Equipment | — |  |  | (105) |  |  | (105) |  |  | 4 |  |  | (122) |  |  | (118) |
Trade Names | — |  |  | (38) |  |  | (38) |  |  | — |  |  | (38) |  |  | (38) |
Other Assets | — |  |  | (62) |  |  | (62) |  |  | — |  |  | (60) |  |  | (60) |
Other, Net | 46 |  |  | (16) |  |  | 30 |  |  | 45 |  |  | (14) |  |  | 31 |
Valuation Allowance | (363) |  |  | — |  |  | (363) |  |  | (350) |  |  | — |  |  | (350) |
Total Deferred Income Taxes | $ | 360 |  |  | $ | (472) |  |  | $ | (112) |  |  | $ | 400 |  |  | $ | (483) |  |  | $ | (83) |
As of January 29, 2022, the Company had loss carryforwards of $405 million, of which $248 million has an indefinite carryforward. The remainder of the U.S. and non-U.S. carryforwards, if unused, will expire at various dates from 2022 through 2040 and 2029 through 2041, re spectively. For certain jurisdictions where the Company has determined that it is more likely than not that the loss carryforwards will not be realized, a valuation allowance has been provided on those loss carryforwards as well as other net deferred tax assets. Income tax payments were $487 million for 2021, $200 million for 2020 and $228 million for 2019. On August 2, 2021, the Company and Victoria's Secret & Co. entered into a Tax Matters Agreement ("TMA"). Under the TMA, the Company will generally be responsible for all U.S. federal, state, local and non-U.S. income taxes of Victoria's Secret & Co. for any taxable period or portion of such period ending on or before the Distribution Date. 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 2021, 2020 and 2019, without interest and penalties:
| 2021 |  | 2020 |  | 2019
| (in millions)
Gross Unrecognized Tax Benefits, as of the Beginning of the Fiscal Year | $ | 152 |  |  | $ | 88 |  |  | $ | 114 |
Increases to Unrecognized Tax Benefits for Prior Years | 5 |  |  | 7 |  |  | 15 |
Decreases to Unrecognized Tax Benefits for Prior Years | (12) |  |  | (50) |  |  | (22) |
Increases to Unrecognized Tax Benefits as a Result of Current Year Activity | 21 |  |  | 113 |  |  | 3 |
Decreases to Unrecognized Tax Benefits Relating to Settlements with Taxing Authorities | (3) |  |  | — |  |  | (16) |
Decreases to Unrecognized Tax Benefits as a Result of a Lapse of the Applicable Statute of Limitations | (16) |  |  | (6) |  |  | (6) |
Gross Unrecognized Tax Benefits, as of the End of the Fiscal Year | $ | 147 |  |  | $ | 152 |  |  | $ | 88 |
Of the total gross unrecognized tax benefits, approximately $132 million, $142 million and $81 million, at January 29, 2022, January 30, 2021, and February 1, 2020, respectively, represents 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 $104 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 an income tax benefit from interest and penalties of approximately $2 million, $3 million and $1 million in 2021, 2020 and 2019, respectively. The Company has accrued $8 million and $10 million for the payment of interest and penalties as of January 29, 2022 and January 30, 2021, 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 returns. The IRS is currently examining the Company's 2020 and 2021 consolidated U.S. federal income tax returns. The Company is also subject to various state and local income tax examinations for the years 2015 to 2020. Finally, the Company is subject to multiple non-U.S. tax jurisdiction examinations for the years 2009 to 2020. 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&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=122134291&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=121826272&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=122134291&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=121826272&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 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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