Dollar General 2012 Annual Report Download - page 150

10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Income taxes (Continued)
The Company has state net operating loss carry forwards as of February 1, 2013 that total
approximately $7.3 million which will expire in 2028. The Company also has state tax credit carry
forwards of approximately $14.0 million that will expire beginning in 2021 through 2023.
The valuation allowance has been provided for state tax credit carry forwards and federal capital
losses. The 2012, 2011, and 2010 decreases of $3.1 million, $2.2 million and $1.0 million, respectively,
were recorded as a reduction in income tax expense. Based upon expected future income, management
believes that it is more likely than not that the results of operations will generate sufficient taxable
income to realize the deferred tax assets after giving consideration to the valuation allowance.
The Internal Revenue Service (‘‘IRS’’) has completed its examination of the Company’s federal
income tax returns for fiscal years 2006, 2007, and 2008. As a result, the 2008 and earlier tax years are
not open for examination by the IRS. The IRS, at its discretion, may choose to examine the Company’s
2009, 2010, or 2011 fiscal year income tax filings. The Company has various state income tax
examinations that are currently in progress. Generally, the Company’s 2009 and later tax years remain
open for examination by the various state taxing authorities.
As of February 1, 2013, accruals for uncertain tax benefits, interest expense related to income taxes
and potential income tax penalties were $22.2 million, $2.3 million and $0.4 million, respectively, for a
total of $24.9 million. Of this amount, $1.5 million and $23.4 million are reflected in current liabilities
as Accrued expenses and other and in noncurrent Other liabilities, respectively, in the consolidated
balance sheet.
As of February 3, 2012, accruals for uncertain tax benefits, interest expense related to income taxes
and potential income tax penalties were $42.0 million, $1.2 million and $0.6 million, respectively, for a
total of $43.8 million. Of this amount, $0.3 million and $41.1 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 $2.4 million reducing deferred tax assets related to net operating loss
carry forwards.
The Company believes that it is reasonably possible that the reserve for uncertain tax positions
may be reduced by approximately $15.4 million in the coming twelve months principally as a result of
the expiration of the statute of limitations. Also, as of February 1, 2013, approximately $22.2 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.
The amounts associated with uncertain tax positions included in income tax expense consists of the
following:
(In thousands) 2012 2011 2010
Income tax expense (benefit) .................... $(16,119) $ 97 $(12,000)
Income tax related interest expense (benefit) ........ 344 968 (5,800)
Income tax related penalty expense (benefit) ........ (200) 63 (700)
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