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v3.22.1

Taxes | 12 Months Ended
--- | ---
Jan. 29, 2022
Taxes Payable Current And Noncurrent [Abstract] |
Taxes |
| 8. | Taxes
Income tax expense (benefit) is as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | Current |  |  | Deferred |  |  | Total |  |  | Current |  |  | Deferred |  |  | Total |  |  | Current |  |  | Deferred |  |  | Total |
|  | (millions) |
Federal |  | $ | 369 |  |  | $ | (21 | ) |  | $ | 348 |  |  | $ | (520 | ) |  | $ | (179 | ) |  | $ | (699 | ) |  | $ | 137 |  |  | $ | 4 |  |  | $ | 141 |
State and local |  |  | 48 |  |  |  | 40 |  |  |  | 88 |  |  |  | 1 |  |  |  | (148 | ) |  |  | (147 | ) |  |  | 33 |  |  |  | (10 | ) |  |  | 23 |
|  | $ | 417 |  |  | $ | 19 |  |  | $ | 436 |  |  | $ | (519 | ) |  | $ | (327 | ) |  | $ | (846 | ) |  | $ | 170 |  |  | $ | (6 | ) |  | $ | 164 |
The income tax expense (benefit) reported differs from the expected tax computed by applying the federal income tax statutory rate of 21% to income before income taxes net of noncontrolling interest. The reasons for this difference and their tax effects are as follows:
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (millions) |
Expected tax |  | $ | 392 |  |  | $ | (1,006 | ) |  | $ | 153 |
State and local income taxes, net of federal income taxes |  |  | 84 |  |  |  | (140 | ) |  |  | 13 |
CARES Act carryback benefit |  |  | (29 | ) |  |  | (205 | ) |  |  | — |
Goodwill impact |  |  | — |  |  |  | 492 |  |  |  | — |
Tax impact of equity awards |  |  | — |  |  |  | 8 |  |  |  | 1 |
Federal tax credits |  |  | (3 | ) |  |  | (5 | ) |  |  | (3 | )
Change in valuation allowance |  |  | (15 | ) |  |  | 24 |  |  |  | 5 |
Other |  |  | 7 |  |  |  | (14 | ) |  |  | (5 | )
|  | $ | 436 |  |  | $ | (846 | ) |  | $ | 164 |
The Company participates in the Internal Revenue Service (“IRS”) Compliance Assurance Program ("CAP"). As part of the CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. The IRS has completed examinations of 2020 and all prior tax years. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
|  | January 29, |  |  | January 30, |
|  | 2022 |  |  | 2021 |
|  | (millions) |
Deferred tax assets |  |  |  |  |  |  |  |
Post employment and postretirement benefits |  | $ | 48 |  |  | $ | 126 |
Accrued liabilities accounted for on a cash basis for tax purposes |  |  | 100 |  |  |  | 103 |
Lease liabilities |  |  | 917 |  |  |  | 937 |
Unrecognized state tax benefits and accrued interest |  |  | 38 |  |  |  | 39 |
State operating loss and credit carryforwards |  |  | 152 |  |  |  | 194 |
Other |  |  | 95 |  |  |  | 95 |
Valuation allowance |  |  | (89 | ) |  |  | (104 | )
Total deferred tax assets |  |  | 1,261 |  |  |  | 1,390 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Excess of book basis over tax basis of property and equipment |  |  | (914 | ) |  |  | (937 | )
Right of use assets |  |  | (751 | ) |  |  | (766 | )
Merchandise inventories |  |  | (300 | ) |  |  | (300 | )
Intangible assets |  |  | (116 | ) |  |  | (115 | )
Other |  |  | (163 | ) |  |  | (180 | )
Total deferred tax liabilities |  |  | (2,244 | ) |  |  | (2,298 | )
Net deferred tax liability |  | $ | (983 | ) |  | $ | (908 | )
The valuation allowance at January 29, 2022 and January 30, 2021 relates to net deferred tax assets for state net operating loss and credit carryforwards. The net change in the valuation allowance amounted to a decrease of $15 million for 2021. In 2020, the net change in the valuation allowance amounted to an increase of $24 million. As of January 29, 2022, the Company had no federal net operating loss carryforwards, state net operating loss carryforwards, net of valuation allowances, of $1,044 million, which will expire between 2022 and 2041, and no state credit carryforwards, net of valuation allowances. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
|  | January 29, |  |  | January 30, |  |  | February 1, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
|  | (millions) |
Balance, beginning of year |  | $ | 113 |  |  | $ | 133 |  |  | $ | 149 |
Additions based on tax positions related to the current year |  |  | 12 |  |  |  | 9 |  |  |  | 18 |
Additions for tax positions of prior years |  |  | — |  |  |  | — |  |  |  | 11 |
Reductions for tax positions of prior years |  |  | (11 | ) |  |  | (13 | ) |  |  | (20 | )
Settlements |  |  | (2 | ) |  |  | (4 | ) |  |  | (16 | )
Statute expirations |  |  | (10 | ) |  |  | (12 | ) |  |  | (9 | )
Balance, end of year |  | $ | 102 |  |  | $ | 113 |  |  | $ | 133 |
Amounts recognized in the Consolidated Balance Sheets |  |  |  |  |  |  |  |  |  |  |  |
Current income taxes |  | $ | 14 |  |  | $ | 6 |  |  | $ | 12 |
Deferred income taxes |  |  | 3 |  |  |  | 3 |  |  |  | 4 |
Other liabilities (a) |  |  | 85 |  |  |  | 104 |  |  |  | 117 |
|  | $ | 102 |  |  | $ | 113 |  |  | $ | 133 |
(a) | Unrecognized tax benefits not expected to be settled within one year are included within other liabilities on the Consolidated Balance Sheets.
Additional information regarding unrecognized benefits and related interest and penalties is as follow:
|  | January 29, |  |  | January 30, |
|  | 2022 |  |  | 2021 |
|  | (millions) |
Amount of unrecognized tax benefits, net of deferred tax assets, that if recognized would affect the effective tax rate |  | $ | 81 |  |  | $ | 90 |
Accrued federal, state and local interest and penalties |  |  | 65 |  |  |  | 60 |
Amounts recognized in the Consolidated Balance Sheets |  |  |  |  |  |  |  |
Current income taxes |  |  | 32 |  |  |  | 3 |
Other liabilities |  |  | 33 |  |  |  | 57 |
The Company classifies federal, state and local interest and penalties not expected to be settled within one year as other liabilities on the Consolidated Balance Sheets and follows a policy of recognizing all interest and penalties related to unrecognized tax benefits in income tax expense. The accrued federal, state and local interest and penalties primarily relate to state tax issues and the amount of penalties paid in prior periods, and the amounts of penalties accrued at January 29, 2022 and January 30, 2021, are insignificant. Federal, state and local interest and penalties amounted to an expense of $5 million, $1 million, and $6 million for 2021, 2020, and 2019, respectively. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The Company is no longer subject to U.S. federal income tax examinations by tax authorities for years before 2018. With respect to state and local jurisdictions, with limited exceptions, the Company and its subsidiaries are no longer subject to income tax audits for years before 2011. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties have been accrued for any adjustments that are expected to result from the years still subject to examination. As of January 29, 2022, the Company believes it is reasonably possible that certain unrecognized tax benefits ranging from zero to $60 million may be recognized by the end of 2022. It is reasonably possible that there could be other material changes to the amount of uncertain tax positions due to activities of the taxing authorities, settlement of audit issues or the reassessment of existing uncertain tax positions; however, the Company is not able to estimate the impact of these items at this time. In January 2022, the Company received $582 million in tax refunds associated with the net operating loss carryback benefit as part of the CARES Act.

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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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