Target 2013 Annual Report Download - page 57

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Net Deferred Tax Asset/(Liability)
(millions) February 1, 2014 February 2, 2013
Gross deferred tax assets:
Accrued and deferred compensation $ 509 $ 537
Foreign operating loss carryforward 394 189
Accruals and reserves not currently deductible 348 352
Self-insured benefits 231 249
Other 193 123
Allowance for doubtful accounts and lower of cost or fair value adjustment on credit
card receivables held for sale —67
Total gross deferred tax assets 1,675 1,517
Gross deferred tax liabilities:
Property and equipment (2,062) (1,995)
Inventory (270) (210)
Other (130) (133)
Deferred credit card income —(91)
Total gross deferred tax liabilities (2,462) (2,429)
Total net deferred tax asset/(liability) $ (787) $ (912)
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 February 1, 2014, we had foreign net operating loss carryforwards of $1,466 million which are available to offset
future income. These carryforwards are primarily related to the start-up operations of the Canadian Segment and
expire between 2031 and 2033. We have evaluated the positive and negative evidence and consider it more likely
than not that these carryforwards will 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 certain ongoing operations and were $77 million at
February 1, 2014 and $52 million at February 2, 2013. It is not practicable to determine the income tax liability that
would be payable if such earnings were repatriated.
We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. The U.S.
Internal Revenue Service has completed exams on the U.S. federal income tax returns for years 2010 and prior. With
few exceptions, we 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) 2013 2012 2011
Balance at beginning of period $ 216 $ 236 $ 302
Additions based on tax positions related to the current year 15 10 12
Additions for tax positions of prior years 28 19 31
Reductions for tax positions of prior years (57) (42) (101)
Settlements (19) (7) (8)
Balance at end of period $ 183 $ 216 $ 236
If we were to prevail on all unrecognized tax benefits recorded, $120 million of the $183 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