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Income Taxes | 12 Months Ended
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Jan. 28, 2023
Income Tax Disclosure [Abstract] |
Income Taxes | 5. In come Taxes Deferred income taxes consist of the following:
(Dollars in Millions) | January 28, 2023 | January 29, 2022
Deferred tax liabilities: |  |
Property and equipment | $542 | $646
Lease assets | 1,140 | 974
Merchandise inventories | 33 | 24
Total deferred tax liabilities | 1,715 | 1,644
Deferred tax assets: |  |
Lease obligations | 1,448 | 1,267
Accrued and other liabilities, including stock-based compensation | 201 | 214
Federal benefit on state tax reserves | 26 | 30
Valuation allowance | (43) | (34)
Total deferred tax assets | 1,632 | 1,477
Net deferred tax liability | $83 | $167
Deferred tax assets included in other long-term assets totaled $46 million as of January 28, 2023 and $39 million as of January 29, 2022. As of January 28, 2023, the Company had state net operating loss carryforwards, net of valuation allowances, of $41 million, and state credit carryforwards, net of valuation allowances, of $3 million, which will expire between 2023 and 2043. As of January 29, 2022, state net operating loss carryforwards, net of valuation allowances, were $46 million, and state credit carryforwards, net of valuation allowances, were $8 million. The components of the (Benefit) provision for income taxes were as follows:
(Dollars in Millions) | 2022 | 2021 | 2020
Current federal | $39 | $311 | $(439)
Current state | 6 | 63 | 38
Deferred federal | (70) | (59) | 69
Deferred state | (14) | (34) | (51)
(Benefit) provision for income taxes | $(39) | $281 | $(383)
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:
(Dollars in Millions) | 2022 | 2021 | 2020
Taxes computed at federal statutory rate | $(12) | $256 | $(115)
State income taxes, net of federal tax benefit | (1) | 32 | (11)
Federal NOL carryback | − | (4) | (360)
Uncertain tax positions | (16) | 7 | 106
Federal tax credits | (8) | (14) | (2)
Other | (2) | 4 | (1)
Total | $(39) | $281 | $(383)
Effective tax rate | 68.1% | 23.1% | 70.2%
The effective tax rate for the year ended January 28, 2023 was higher than the effective tax rate for the year ended January 29, 2022 because of the impact of favorable results from uncertain tax positions as well as federal tax credits relative to consolidated book net income (loss). The 2020 rate reflects the benefit for the net operating loss carryback provision from the CARES Act enacted on March 27, 2020. 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 2022 tax years. 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 2013. 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) | 2022 | 2021
Balance at beginning of year | $276 | $298
Increases due to tax positions taken in prior years | 1 | 12
Increases due to tax positions taken in current year | 7 | 27
Decreases due to: |  |
Tax positions taken in prior years | (57) | (53)
Settlements with taxing authorities | (2) | (3)
Lapse of applicable statute of limitations | (6) | (5)
Balance at end of year | $219 | $276
Included above in the tax positions taken in prior years for 2022 is a reclass between the unrecognized tax benefits and the deferred tax liability; it had no impact on the effective tax rate. Not included in the unrecognized tax benefits reconciliation above are gross unrecognized accrued interest and penalties of $41 million at January 28, 2023 and $43 million at January 29, 2022. Interest and penalty expenses were ($1) million in 2022, $3 million in 2021, and $18 million in 2020. Our net unrecognized tax benefits that, if recognized, would affect our effective tax rate were $202 million as of January 28, 2023 and $256 million as of January 29, 2022. 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 $27 million as of January 28, 2023 and $15 million as of January 29, 2022. Receivables included in other long term assets totaled $195 million as of January 28, 2023 and $300 million as of January 29, 2022. The majority of the receivable balance relates to the cash benefit of the 2020 net operating loss that has not yet been received. Payables included in current liabilities totaled $12 million as of January 28, 2023 and $106 million as of January 29, 2022.

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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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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