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Income Taxes | 12 Months Ended
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Feb. 01, 2020
Income Taxes |
Income Taxes | (15) Income Taxes For the fiscal years ended February 1, 2020, February 2, 2019, and February 3, 2018, the income tax provision consisted of the following:
|  | February 1, |  | February 2, |  | February 3, |
|  | 2020 |  | 2019 |  | 2018 |
Current: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 4,004 |  | $ | 4,630 |  | $ | 12,718 |
State |  |  | 540 |  |  | 1,719 |  |  | 1,868 |
Total current |  |  | 4,544 |  |  | 6,349 |  |  | 14,586 |
Deferred: |  |  |  |  |  |  |  |  |  |
Federal |  |  | 1,246 |  |  | 598 |  |  | 780 |
State |  |  | (536) |  |  | 116 |  |  | (278) |
Total deferred |  |  | 710 |  |  | 714 |  |  | 502 |
Total income tax provision |  | $ | 5,254 |  | $ | 7,063 |  | $ | 15,088 |
The provision for income taxes differs from the amounts computed by applying the federal statutory rate as follows for the following periods:
|  | February 1, |  | February 2, |  | February 3, |
|  | 2020 |  | 2019 |  | 2018 |
Federal statutory rate |  |  | 21.0 | % |  | 21.0 | % |  | 33.7 | %
State tax, net of federal benefit |  |  | 1.5 |  |  | 4.1 |  |  | 3.8 |
Permanent items |  |  | 1.1 |  |  | 2.5 |  |  | 2.0 |
Other items |  |  | (0.2) |  |  | (0.4) |  |  | (0.2) |
Tax credits |  |  | (2.8) |  |  | — |  |  | — |
Tax reform adjustment |  |  | — |  |  | (4.3) |  |  | 6.7 |
Effective income tax rate |  |  | 20.6 | % |  | 22.9 | % |  | 46.0 | %
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at February 1, 2020 and February 2, 2019, respectively, are presented below:
|  | February 1, |  | February 2,
|  | 2020 |  | 2019
Deferred tax assets: |  |  |  |  |  |
Accrued liabilities |  | $ | 558 |  | $ | 453
Operating lease liability |  |  | 63,187 |  |  | —
Gift card liability |  |  | 289 |  |  | —
Goodwill |  |  | 835 |  |  | —
Deferred rent |  |  | — |  |  | 11,835
Intangible asset |  |  | 1,224 |  |  | 1,374
Inventories |  |  | 1,452 |  |  | 1,940
Sales return reserve |  |  | 208 |  |  | 185
Capital loss carryforward |  |  | 39 |  |  | 39
Stock-based compensation |  |  | 403 |  |  | 290
Loyalty program |  |  | 2,415 |  |  | 2,191
Total gross deferred tax assets |  | $ | 70,610 |  | $ | 18,307
Deferred tax liabilities: |  |  |  |  |  |
Depreciation |  | $ | (15,020) |  | $ | (14,670)
ROU asset |  |  | (55,272) |  |  | —
Prepaid expenses |  |  | (836) |  |  | (553)
Gift card escheatment |  |  | (44) |  |  | (87)
Total gross deferred tax liabilities |  | $ | (71,172) |  | $ | (15,310)
Net deferred tax asset (liability) |  | $ | (562) |  | $ | 2,997
On December 22, 2017 the U.S. Government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act made broad and complex changes to existing U.S. tax laws that impact the Company. Most notably, the Tax Act reduced the U.S. Federal corporate tax rate from 35 percent to 21 percent effective January 1, 2018. The Tax Act also provides for the acceleration of depreciation for certain assets placed in service after September 27, 2017. The Tax Act also established prospective changes beginning in 2018 including the limitations on the deductibility of certain executive compensation and interest expense. The Company does not expect these limitations to have a significant impact on our consolidated financial statements. As a result of the Tax Act, the Company recorded a discrete net tax expense of $2,153 in the period ending February 3, 2018. The primary components of this tax expense include $2,600 for the revaluation of U.S. deferred tax assets and liabilities at the new corporate tax rate of 21 percent, offset by a tax benefit of $447 due to the reduction in effective rate based on the time of enactment of the tax law and our fiscal year-end. Pursuant to Staff Accounting Bulletin 118, the Company was allowed a measurement period of up to one year after the enactment date of the Tax Act to finalize the recording of the related tax impacts. However, the Company did not have any provisional estimates associated with the Tax Act and therefore, did not record any adjustments relating to the Tax Act. For the year ended February 2, 2019, the Company recorded a discrete net benefit of $1,300 related to Tax Reform. This was a result of certain accounting method changes and other permitted timing adjustments that were ultimately reflected on the Company’s fiscal 2017 tax return filed in fiscal 2018 resulting in a net benefit due to changes in the federal tax rates under the Tax Act. Deferred tax assets have resulted primarily from the Company’s future deductible temporary differences. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company’s ability to realize its deferred tax assets depends upon the generation of sufficient future taxable income as well as the ability to use historical taxable income to allow for the utilization of its deductible temporary differences. Management evaluates the realizability of the deferred tax assets and the need for additional valuation allowances quarterly. At February 1, 2020, based on current facts and circumstances, management believes that it is more likely than not that the Company will realize benefit for its deferred tax assets. As of February 1, 2020, the Company had no unrecognized tax benefits. The Company does not anticipate that unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date. Federal and state tax years that remain subject to examination are periods ended February 1, 2015 through February 2, 2019. The Company’s policy is to accrue interest expense, and penalties as appropriate, on estimated unrecognized tax benefits as a charge to interest expense in the consolidated statements of income. During fiscal year 2017, the Company accrued interest and penalties of $95. No interest or penalties were accrued for fiscal year 2019 or fiscal year 2018.

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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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