Lowe's 2014 Annual Report Download - page 68

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The tax effects of cumulative temporary differences that gave rise to the deferred tax assets and liabilities were as follows:
(In millions)
January 30,
2015
January 31,
2014
Deferred tax assets:
Self-insurance $ 378
$ 384
Share-based payment expense 81
70
Deferred rent 88
80
Foreign currency translation 62
8
Net operating losses 152
148
Other, net 131
130
Total deferred tax assets 892
820
Valuation allowance (170 ) (164)
Net deferred tax assets 722
656
Deferred tax liabilities:
Property (534 ) (646)
Other, net (55 ) (49)
Total deferred tax liabilities (589 )
(695)
Net deferred tax asset (liability) $ 133
$ (39 )
The Company operates as a branch in various foreign jurisdictions and cumulatively has incurred net operating losses of $557
million and $547 million as of January 30, 2015, and January 31, 2014, respectively. These net operating losses are subject to
expiration in 2017 through 2034. Deferred tax assets have been established for these foreign net operating losses in the
accompanying consolidated balance sheets. Given the uncertainty regarding the realization of the foreign net deferred tax
assets, including these foreign net operating losses, the Company recorded cumulative valuation allowances of $170 million
and $164 million as of January 30, 2015, and January 31, 2014, respectively.
The Company has not provided for deferred income taxes on accumulated but undistributed earnings of the Company's foreign
operations of approximately $112 million and $51 million as of January 30, 2015, and January 31, 2014, respectively, due to its
intention to permanently reinvest these earnings outside the U.S. It is not practicable to determine the income tax liability that
would be payable on these earnings. The Company will provide for deferred or current income taxes on such earnings in the
period it determines requisite to remit those earnings.
A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows:
(In millions) 2014 2013 2012
Unrecognized tax benefits, beginning of year $ 62
$ 63
$ 146
Additions for tax positions of prior years 2
—
20
Reductions for tax positions of prior years (57 )
—
(3)
Settlements
—
(1 ) (100)
Unrecognized tax benefits, end of year $ 7
$ 62
$ 63
The amounts of unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate were $4 million and
$62 million as of January 30, 2015, and January 31, 2014, respectively.
During 2014, the Company recognized $1 million of interest income and an insignificant decrease in penalties related to
uncertain tax positions. As of January 30, 2015, the Company had $2 million of accrued interest and an insignificant amount of
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