Target 2007 Annual Report Download - page 56

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Reconciliation of tax rates is as follows:
Tax Rate Reconciliation 2007 2006 2005
Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit 4.0 4.0 3.3
Other (0.6) (1.0) (0.7)
Effective tax rate 38.4% 38.0% 37.6%
The components of the provision for income taxes were as follows:
Provision for Income Taxes: Expense (Benefit)
(millions) 2007 2006 2005
Current
Federal $1,568 $1,627 $1,361
State/other 278 284 213
1,846 1,911 1,574
Deferred
Federal (67) (174) (110)
State/other (3) (27) (12)
(70) (201) (122)
Total $1,776 $1,710 $1,452
The components of the net deferred tax asset/(liability) were as follows:
Net Deferred Tax Asset/(Liability) February 2, February 3,
(millions) 2008 2007
Gross deferred tax assets
Accrued and deferred compensation $ 466 $ 466
Accruals and reserves not currently deductible 347 169
Self-insured benefits 271 238
Allowance for doubtful accounts 220 191
Other 104 62
1,408 1,126
Gross deferred tax liabilities
Property and equipment (1,069) (1,041)
Pension (131) (100)
Deferred credit card income (94) (119)
Other (28) (16)
(1,322) (1,276)
Total $86 $ (150)
We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions.
With few exceptions, we are no longer subject to income tax examinations for years before 1998.
We adopted the provisions of FIN 48 on February 4, 2007. As a result of the adoption of FIN 48, we
recorded a $19 million decrease to retained earnings. A reconciliation of the beginning and ending amount of
unrecognized tax benefits is as follows:
Reconciliation of Unrecognized Tax Benefits
(millions)
Balance at February 4, 2007 $379
Additions based on tax positions related to the current year 60
Additions for tax positions of prior years 26
Reductions for tax positions of prior years (8)
Settlements (15)
Balance at February 2, 2008 $442
38