Dillard's 2013 Annual Report Download - page 62

F-16
A reconciliation between the Company's income tax provision and income taxes using the federal statutory income tax
rate is presented below:
(in thousands of dollars) Fiscal 2013 Fiscal 2012 Fiscal 2011
Income tax at the statutory federal rate (inclusive of income on and equity
in losses of joint ventures). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 173,975 $ 168,358 $ 140,487
State income taxes, net of federal benefit (inclusive of income on and
equity in losses of joint ventures) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,013 5,375 2,261
Net changes in unrecognized tax benefits, interest, and penalties /reserves. . (481)(1,766)(565)
Tax benefit of federal credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,037)(2,759)(3,702)
Changes in cash surrender value of life insurance policies. . . . . . . . . . . . . . . (986)(1,160)(982)
Changes in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,501)(1,027)(199,299)
Tax benefit of dividends paid to ESOP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (581)(19,728)(797)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,998 (2,233)79
$ 173,400 $ 145,060 $ (62,518)
During fiscal 2013, income taxes included the recognition of tax benefits of approximately $5.5 million related to
decreases in valuation allowances related to state net operating loss carryforwards and $3.0 million related to federal tax
credits.
During fiscal 2012, income taxes included the recognition of tax benefits of approximately $19.7 million due to
deductions for dividends paid to the Dillard's, Inc. Investment and Employee Stock Ownership Plan, $2.8 million related to
federal tax credits, $1.2 million for the increase in the cash surrender value of life insurance policies, $1.8 million due to net
decreases in unrecognized tax benefits, interest and penalties, $1.7 million for an amended return filed where capital gain
income was offset by a previously unrecognized capital loss carryforward available in the amended return year, and $1.0
million related to decreases in valuation allowances related to state net operating loss carryforwards.
In January 2011, the Company formed a wholly-owned subsidiary intended to operate as a real estate investment trust
("REIT") and transferred certain properties to this subsidiary. The Company made a tax election in its tax return for the fiscal
year ended January 29, 2011 which increased the tax basis of the properties transferred to the REIT to their fair values at the
date of the transfer. The income tax that would otherwise be payable because of the gain recognized by this election was largely
reduced by the utilization of a capital loss carryforward, that would otherwise have expired as of January 29, 2011, against a
portion of the recognized gain.
During fiscal 2011, income taxes included the recognition of tax benefits of approximately $201.6 million due to the
valuation allowance reversal related to the REIT Transaction, $3.7 million related to federal tax credits, $1.0 million for the
increase in the cash surrender value of life insurance policies, $0.6 million due to net decreases in unrecognized tax benefits,
interest and penalties, and $0.6 million related to decreases in net deferred tax liabilities resulting from legislatively-enacted
state tax rate reductions. These tax benefits were partially offset by the recognition of tax expense of approximately $2.3
million due to increases in net operating loss valuation allowances related to state net operating loss carryforwards.