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Income Taxes | 12 Months Ended
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Jan. 30, 2021
Income Tax Disclosure [Abstract] |
Income Taxes | 5. Income Taxes Deferred income taxes consist of the following:
(Dollars in Millions) | January 30, 2021 | February 1, 2020
Deferred tax liabilities: |  |  |  |  |  |  |  |  |  |
Property and equipment | $ | 718 |  |  | $ | 611 |  |
Lease assets |  | 821 |  |  |  |  | 816 |  |
Merchandise inventories |  | 46 |  |  |  | 76 |  |
Total deferred tax liabilities |  |  | 1,585 |  |  |  |  | 1,503 |  |
Deferred tax assets: |  |  |  |  |  |  |  |  |  |
Lease obligations |  |  | 1,093 |  |  |  |  | 1,110 |  |
Accrued and other liabilities, including stock-based compensation |  | 244 |  |  |  | 144 |  |
Federal benefit on state tax reserves |  |  | 30 |  |  |  |  | 30 |  |
Valuation allowance |  | (42 | ) |  |  | (23 | ) |
Total deferred tax assets |  |  | 1,325 |  |  |  |  | 1,261 |  |
Net deferred tax liability | $ | 260 |  |  | $ | 242 |  |
Deferred tax assets included in other long-term assets totaled $42 million as of January 30, 2021 and $18 million as of February 1, 2020. As of January 30, 2021, the Company had state net operating loss carryforwards, net of valuation allowances, of $88 million, and state credit carryforwards, net of valuation allowances, of $6 million, which will expire between 2021 and 2041. As of February 1, 2020, state net operating loss carryforwards, net of valuation allowances, were $24 million, and state credit carryforwards, net of valuation allowances, were $7 million. The components of the (benefit) provision for income taxes were as follows:
(Dollars in Millions) | 2020 | 2019 | 2018
Current federal |  | $ | (439) |  |  | $ | 128 |  |  | $ | 229 |
Current state |  |  | 38 |  |  |  | 31 |  |  |  | 43 |
Deferred federal |  |  | 69 |  |  |  | 60 |  |  |  | (36 | )
Deferred state |  |  | (51) |  |  |  | (9 | ) |  |  | 5 |
(Benefit) provision for income taxes |  | $ | (383) |  |  | $ | 210 |  |  | $ | 241 |
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted and signed into law. The CARES Act modified a number of corporate tax provisions, such as the limitations on the deduction of business interest expense under Section 163(j) as well as allowing net operating loss carryovers and carrybacks to fully offset taxable income for years beginning before 2021. Additionally, the CARES Act allows net operating losses incurred in 2018, 2019, and 2020 to be carried back to the five preceding tax years to generate a refund of previously paid income taxes. 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:
| 2020 | 2019 | 2018
Federal statutory rate |  |  | 21.0 | % |  |  |  | 21.0 | % |  |  |  | 21.0 | %
State income taxes, net of federal tax benefit |  |  | 2.1 |  |  |  |  | 3.1 |  |  |  |  | 3.7 |
Federal NOL carryback |  |  | 66.0 |  |  |  |  | — |  |  |  |  | — |
Uncertain tax positions |  |  | (19.4 | ) |  |  |  | 0.6 |  |  |  |  | (0.2 | )
Federal tax credits |  |  | 0.4 |  |  |  |  | (1.2 | ) |  |  |  | (1.0 | )
Other |  |  | 0.1 |  |  |  |  | (0.2 | ) |  |  |  | (0.3 | )
Effective tax rate |  |  | 70.2 | % |  |  |  | 23.3 | % |  |  |  | 23.2 | %
The effective tax rate for the year ended January 30, 2021, was higher than the effective tax rate for the year ended February 1, 2020, primarily due to the federal net operating loss (“NOL”) generated in the current year that will be carried back up to five taxable years. The Company has calculated a federal NOL for the year ended January 30, 2021 and will carryback the federal NOL generated in the current year to tax years 2015 – 2017. As a result, for the year ended January 30, 2021, the Company recorded an income tax benefit of $474 million due to the federal income tax rate differential for the year ended January 30, 2021 of 21% versus tax years 2015 – 2017 of 35%. 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 2012 through 2020 tax years, excluding the 2014 tax year. State returns subject to examination vary depending upon the state. Generally, 2016 through 2020 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. We assess our income tax positions and record tax liabilities for all years subject to examination based upon management’s evaluation of the facts and circumstances and information available at the reporting dates. For those income tax positions where it is more-likely-than-not, based on technical merits, that a tax benefit will be sustained upon the conclusion of an examination, we have recorded the largest amount of tax benefit having a cumulatively greater than 50% likelihood of being realized upon ultimate settlement with the applicable taxing authority, assuming that it has full knowledge of all relevant information. For those tax positions which do not meet the more-likely-than-not threshold regarding the ultimate realization of the related tax benefit, no tax benefit has been recorded in the financial statements. In addition, we provide for interest and penalties, as applicable, and record such amounts as a component of the overall income tax provision. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:
(Dollars in Millions) | 2020 | 2019
Balance at beginning of year |  | $ | 135 |  |  | $ | 133 |
Increases due to tax positions taken in prior years |  |  | — |  |  |  | 7 |
Increases due to tax positions taken in current year |  |  | 177 |  |  |  | 12 |
Decreases due to: |  |  |  |  |  |  |  |
Tax positions taken in prior years |  |  | (9 | ) |  |  | (14 | )
Settlements with taxing authorities |  |  | (4 | ) |  |  | — |
Lapse of applicable statute of limitations |  |  | (1 | ) |  |  | (3 | )
Balance at end of year |  | $ | 298 |  |  | $ | 135 |
Not included in the unrecognized tax benefits reconciliation above are gross unrecognized accrued interest and penalties of $42 million at January 30, 2021 and $35 million at February 1, 2020. Interest and penalty expenses were $18 million in 2020, $4 million in 2019, and $5 million in 2018. Our total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $276 million as of January 30, 2021 and $112 million as of February 1, 2020. 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 income taxes recorded on our balance sheet. Receivables included in other current assets totaled $610 million as of January 30, 2021 and $15 million as of February 1, 2020. Receivables included in other long term assets totaled $232 million as of January 30, 2021; there was no long term receivable as of February 1, 2020. Payables included in current liabilities totaled $10 million as of January 30, 2021 and $48 million as of February 1, 2020.

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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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