Target 2011 Annual Report Download - page 73

Net Deferred Tax Asset/(Liability) January 28, January 29,
(millions) 2012 2011
Gross deferred tax assets:
Accrued and deferred compensation $ 489 $ 451
Allowance for doubtful accounts 157 229
Accruals and reserves not currently deductible 347 373
Self-insured benefits 257 251
Foreign operating loss carryforward 43 —
Other 149 67
Total gross deferred tax assets 1,442 1,371
Gross deferred tax liabilities:
Property and equipment (1,930) (1,607)
Deferred credit card income (102) (145)
Inventory (162) (77)
Other (109) (97)
Total gross deferred tax liabilities (2,303) (1,926)
Total net deferred tax liability $ (861) $ (555)
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary
differences between financial statement carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted income tax rates in effect for the year the
temporary differences are expected to be recovered or settled. Tax rate changes affecting deferred tax assets and
liabilities are recognized in income at the enactment date.
At January 28, 2012, foreign net operating loss carryforwards of $166 million are available to offset future
income. These carryforwards expire in 2031 and are expected to be fully utilized prior to expiration.
We have not recorded deferred taxes when earnings from foreign operations are considered to be indefinitely
invested outside the U.S. These accumulated net earnings relate to ongoing operations and were $300 million at
January 28, 2012 and $333 million at January 29, 2011. It is not practicable to determine the income tax liability that
would be payable if such earnings were not indefinitely reinvested.
We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. We
are no longer subject to U.S. federal income tax examinations for years before 2010 and, with few exceptions, are
no longer subject to state and local or non-U.S. income tax examinations by tax authorities for years before 2003.
Reconciliation of Liability for Unrecognized Tax Benefits
(millions) 2011 2010 2009
Balance at beginning of period $ 302 $ 452 $434
Additions based on tax positions related to the current year 12 16 119
Additions for tax positions of prior years 31 68 47
Reductions for tax positions of prior years (101) (222) (61)
Settlements (8) (12) (87)
Balance at end of period $ 236 $ 302 $452
If we were to prevail on all unrecognized tax benefits recorded, $155 million of the $236 million reserve would
benefit the effective tax rate. In addition, the reversal of accrued penalties and interest would also benefit the
effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax
expense. During the years ended January 28, 2012, January 29, 2011 and January 30, 2010, we recorded a benefit
from the reversal of accrued penalties and interest of $12 million, $28 million and $10 million, respectively. We had
accrued for the payment of interest and penalties of $82 million at January 28, 2012, $95 million at January 29, 2011
and $127 million at January 30, 2010.
It is reasonably possible that the amount of the unrecognized tax benefits with respect to our other
unrecognized tax positions will increase or decrease during the next twelve months; however, an estimate of the
amount or range of the change cannot be made at this time.
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PART II