Dollar General 2009 Annual Report Download - page 94

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DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Income taxes (Continued)
As of January 30, 2009, accruals for uncertain tax benefits, interest expense related to income taxes
and potential income tax penalties were $59.1 million, $11.3 million and $1.5 million, respectively, for a
total of $71.9 million. Of this amount, $20.8 million and $47.3 million are reflected in current liabilities
as Accrued expenses and other and in noncurrent Other liabilities, respectively, in the consolidated
balance sheet with the remaining $3.8 million reducing deferred tax assets related to net operating loss
carry forwards.
During the year ended January 30, 2009, the Company included in its consolidated statement of
operations a net increase of $0.8 million, a net decrease of $1.0 million and a net increase of
$0.3 million related to uncertain tax benefits, interest expense related to income taxes and potential tax
penalties, respectively. The net decrease in interest expense related to uncertain tax positions is due to
the reduction during 2008 in amounts previously accrued related to uncertain tax positions.
The change, from the date of adoption, through the end of the Predecessor period ended July 6,
2007 in the uncertain tax benefits, interest expense related to income taxes and potential income tax
penalties that impacted the consolidated statement of operations was a net increase of $10.4 million
and $0.2 million and a decrease of $0.4 million, respectively. The change, from the end of the
Predecessor period ended July 6, 2007, through the end of the Successor period ended February 1,
2008, in the uncertain tax benefits and interest expense related to income taxes that impacted the
consolidated statement of operations was a net increase of $0.2 million and $4.2 million, respectively.
There was no change in the reserve for potential income tax penalties during the Successor period
ended February 1, 2008.
The Company believes that it is reasonably possible that the reserve for uncertain tax positions
may be reduced by approximately $36.5 million in the coming twelve months principally as a result of
the settlement of currently ongoing income tax examinations and the anticipated filing of an income tax
accounting method change request that is expected to resolve certain uncertainties related to
accounting methods employed by the Company. The reasonably possible change of $36.5 million is
included in current liabilities in Accrued expenses and other ($7.7 million) and in noncurrent Other
liabilities ($28.8 million) in the consolidated balance sheet as of January 29, 2010. Also, as of
January 29, 2010, approximately $41.2 million of the uncertain tax positions would impact the
Company’s effective income tax rate if the Company were to recognize the tax benefit for these
positions.
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