CarMax 2014 Annual Report Download - page 64

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60
EFFECTIVE INCOME TAX RATE RECONCILIATION
Years Ended February 28 or 29
2014 2013 2012
Federal statutory income tax rate 35.0 % 35.0 % 35.0 %
State and local income taxes, net of federal benefit 3.1 2.9 2.9
N
ondeductible and other items 0.2 0.2 0.2
Credits
(0.1) ― (0.2)
Valuation allowance ― ― 0.1
Effective income tax rate 38.2 % 38.1 % 38.0 %
TEMPORARY DIFFERENCES RESULTING IN DEFERRED TAX ASSETS AND LIABILITIES
As of February 28
(In thousands)
2014 2013
Deferred tax assets:
Accrued expenses
$ 48,611 $ 35,270
Partnership basis 71,503 70,737
Property and equipment
― 3,510
Stock compensation 60,158 53,297
Derivatives
4,896 3,904
Capital loss carry forward 1,296 1,110
Total gross deferred tax assets 186,464
167,828
Less: valuation allowance (1,296) (1,110)
N
et gross deferred tax assets 185,168
166,718
Deferred tax liabilities:
Prepaid expenses 13,991 9,429
Property and equipment
3,737 ―
Inventory 7,375 6,221
Total gross deferred tax liabilities 25,103
15,650
N
et deferred tax asset $ 160,065 $ 151,068
Except for amounts for which a valuation allowance has been provided, we believe it is more likely than not that the
results of future operations will generate sufficient taxable income to realize the deferred tax assets. The valuation
allowance as of February 28, 2014, relates to capital loss carryforwards that are not more likely than not to be
utilized prior to their expiration.
RECONCILIATION OF UNRECOGNIZED TAX BENEFITS
Years Ended February 28 or 29
(In thousands) 2014 2013 2012
Balance at beginning of year $ 25,059 $ 20,930 $ 18,662
Increases for tax positions of prior years 1,523 1,685 5,403
Decreases for tax positions of prior years (4,658) (596) (6,918)
Increases based on tax positions related to the current year 5,960 7,491 4,754
Settlements (809) (4,136) (334)
Lapse of statute (745) (315) (637)
Balance at end of year $ 26,330 $ 25,059 $ 20,930