Target 2014 Annual Report Download - page 56

Net Deferred Tax Asset/(Liability)
(millions)
January 31,
2015
February 1,
2014
Gross deferred tax assets:
Accrued and deferred compensation $ 531 $ 509
Accruals and reserves not currently deductible 316 348
Self-insured benefits 223 231
Other 176 97
Total gross deferred tax assets 1,246 1,185
Gross deferred tax liabilities:
Property and equipment (1,946) (1,978)
Inventory (307) (270)
Other (123) (130)
Total gross deferred tax liabilities (2,376) (2,378)
Total net deferred tax liability $ (1,130) $ (1,193)
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. Ta x rate changes affecting deferred tax assets and liabilities are recognized
in income at the enactment date.
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 $328 million at
January 31, 2015 and $64 million at February 1, 2014. 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) 2014 2013 2012
Balance at beginning of period $ 183 $ 216 $ 236
Additions based on tax positions related to the current year 10 15 10
Additions for tax positions of prior years 17 28 19
Reductions for tax positions of prior years (42) (57) (42)
Settlements (13) (19) (7)
Balance at end of period $ 155 $ 183 $ 216
If we were to prevail on all unrecognized tax benefits recorded, $101 million of the $155 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 31, 2015, February 1, 2014 and February 2, 2013, we recorded a net benefit from the reversal
of accrued penalties and interest of $12 million, $1 million and $16 million, respectively. As of January 31, 2015,
February 1, 2014 and February 2, 2013 total accrued interest and penalties were $40 million, $58 million and $64
million, respectively.
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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