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Income Taxes | 12 Months Ended
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Feb. 01, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 5. Income Taxes Deferred income taxes consist of the following:
| Feb 1, 2020 | Feb 2, 2019
(Dollars in Millions)
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |
Property and equipment | $ | 611 |  |  | $ | 756 |  |
Lease assets |  | 816 |  |  |  |  | — |  |
Merchandise inventories |  | 76 |  |  |  | 73 |  |
Total deferred tax liabilities |  |  | 1,503 |  |  |  | 829 |  |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |
Lease obligations |  |  | 1,110 |  |  |  | 425 |  |
Accrued and other liabilities, including stock-based compensation |  | 121 |  |  |  | 136 |  |
Accrued step rent liability |  |  | — |  |  |  | 79 |  |
Federal benefit on state tax reserves |  | 30 |  |  |  | 29 |  |
Total deferred tax assets |  |  | 1,261 |  |  |  | 669 |  |
Net deferred tax liability | $ | 242 |  |  | $ | 160 |  |
Deferred tax assets included in other long-term assets totaled $18 million as of February 1, 2020 and $24 million as of February 2, 2019. The components of the provision for income taxes were as follows:
| (Dollars in Millions) |  | 2019 |  |  | 2018 |  |  | 2017 |
| Current federal | $ | 128 |  | $ | 229 |  | $ | 299 |
| Current state |  |  | 31 |  |  |  | 43 |  |  |  | 26 |
| Deferred federal |  |  | 60 |  |  |  | (36 | ) |  |  | (86 | )
| Deferred state |  |  | (9 | ) |  |  | 5 |  |  |  | 19 |
| Provision for income taxes | $ | 210 |  | $ | 241 |  | $ | 258 |
On December 22, 2017, H.R. 1, originally the Tax Cuts & Jobs Act, was signed into law making significant changes to the Internal Revenue Code. Changes include a corporate rate decrease from 35% to 21%, effective January 1, 2018, as well as a variety of other changes including the acceleration of expensing of certain business assets and reductions in the amount of executive pay that could qualify as a tax deduction. On December 22, 2017, Staff Accounting Bulletin No. 118 was issued to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed in reasonable detail to complete the accounting for certain income tax effects of the Act. As of December 22, 2018, all impacts of the Act were analyzed and recorded. Adjustments recorded in 2018 were not material. The effective tax rate differs from the amount that would be provided by applying the statutory U.S. corporate tax rate due to the following items:
| 2019 | 2018 | 2017
| Provision at statutory rate |  |  | 21.0 | % |  |  |  | 21.0 | % |  |  |  | 33.7 | % |
| State income taxes, net of federal tax benefit |  |  | 3.2 |  |  |  |  | 3.8 |  |  |  |  | 1.0 |  |
| Re-measurement of deferred tax assets and liabilities |  |  | — |  |  |  |  | — |  |  |  |  | (10.9 | ) |
| Other federal tax credits |  |  | (1.2 | ) |  |  |  | (1.0 | ) |  |  |  | (0.7 | ) |
| Other |  |  | 0.3 |  |  |  |  | (0.6 | ) |  |  |  | — |  |
| Provision for income taxes |  |  | 23.3 | % |  |  |  | 23.2 | % |  |  |  | 23.1 | % |
The re-measurement of deferred tax assets and liabilities in 2017 includes the following impacts:
| • | Revaluation of deferred taxes that existed on December 22, 2017, the enactment date of the Act.
| • | Deferred taxes that were created after December 22, 2017. These items were deducted at the federal statutory rate of 33.7%, but will reverse at the 21% rate.
We have analyzed filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. The federal returns subject to examination are the 2008 through 2019 tax years, excluding the 2014 tax year. State returns subject to examination vary depending upon the state. Generally, 2015 through 2019 tax years are subject to state examination. The earliest state open period is 2007. Certain states have proposed adjustments, which we are currently appealing. If we do not prevail on our appeals, we do not anticipate that the adjustments would result in a material change in our financial position. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:
| (Dollars in Millions) |  | 2019 |  |  | 2018 |
| Balance at beginning of year | $ | 133 |  | $ | 135 |
| Increases due to tax positions taken in prior years |  | 7 |  |  | — |
| Increases due to tax positions taken in current year |  |  | 12 |  |  |  | 13 |
| Decreases due to: |  |  |  |  |  |  |  |
| Tax positions taken in prior years |  |  | (14 | ) |  |  | (3 | )
| Settlements with taxing authorities |  |  | — |  |  |  | (3 | )
| Lapse of applicable statute of limitations |  |  | (3 | ) |  |  | (9 | )
| Balance at end of year | $ | 135 |  | $ | 133 |
Not included in the unrecognized tax benefits reconciliation above are gross unrecognized accrued interest and penalties of $35 million at February 1, 2020 and $31 million at February 2, 2019. Interest and penalty expenses were $4 million in 2019, $5 million in 2018, and $4 million in 2017. Our total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $112 million as of February 1, 2020 and $110 million as of February 2, 2019. It is reasonably possible that our unrecognized tax positions may change within the next 12 months, primarily as a result of ongoing audits. While it is possible that one or more of these examinations may be resolved in the next year, it is not anticipated that a significant impact to the unrecognized tax benefit balance will occur. We have both payables and receivables for current income taxes recorded on our balance sheet. Receivables included in other current assets totaled $15 million as of February 1, 2020 and $29 million as of February 2, 2019.

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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