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Income Taxes (Tables)

12 Months Ended

Feb. 01, 2014

Income tax expense consists of the following:



Fiscal year	2013		2012		2011
Current income taxes:
Federal		$379		$362		$359
State and local	64		66		63
Total current income tax expense	443		428		422
Deferred income taxes:
Federal	9		21		20
State and local	3		1		(6		)
Total deferred income tax expense	12		22		14
Total income tax expense		$455		$450		$436

Reconciliation Of Statutory To Effective Tax Rate

A reconciliation of the statutory federal income tax rate to the effective tax rate on earnings before income taxes is as follows:



Fiscal year	2013		2012		2011
Statutory rate	35.0	%	35.0	%	35.0	%
State and local income taxes, net of federal income taxes	3.6		3.6		3.6
Non-taxable acquisition-related items	—		—		0.6
Other, net	(0.3	)	(0.6	)	(0.2	)
Effective tax rate	38.3	%	38.0	%	39.0	%

Components Of Deferred Tax Assets And Liabilities

The major components of deferred tax assets and liabilities are as follows:



	February 1, 2014			February 2, 2013
Compensation and benefits accruals		$182			$177
Allowance for sales returns	56			51
Accrued expenses	48			43
Allowance for credit losses	32			33
Merchandise inventories	28			24
Gift cards and gift certificates	21			18
Gain on sale of interest rate swap	19			24
Loyalty reward certificates	18			22
Federal benefit of state taxes	6			7
Other	16			13
Total deferred tax assets	426			412
Land, buildings and equipment basis and depreciation differences	(98		)	(90		)
Debt exchange premium	(24		)	—
Total deferred tax liabilities	(122		)	(90		)
Net deferred tax assets		$304			$322

Reconciliation Of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2013, 2012 and 2011 is as follows:



Fiscal year	2013			2012			2011
Unrecognized tax benefit at beginning of year		$15			$21			$43
Gross increase to tax positions in prior periods	3			1			14
Gross decrease to tax positions in prior periods	(1		)	(7		)	(14		)
Gross increase to tax positions in current period	1			1			2
Settlements	(4		)	(1		)	(24		)
Unrecognized tax benefit at end of year		$14			$15			$21

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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