Dollar General 2014 Annual Report Download - page 139

10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Income taxes
The provision (benefit) for income taxes consists of the following:
(In thousands) 2014 2013 2012
Current:
Federal ............................... $543,089 $530,728 $457,370
Foreign ............................... 1,245 1,324 1,209
State ................................ 81,816 101,174 78,025
626,150 633,226 536,604
Deferred:
Federal ............................... (7,697) (16,132) 9,734
State ................................ (2,937) (13,880) (1,606)
(10,634) (30,012) 8,128
$615,516 $603,214 $544,732
A reconciliation between actual income taxes and amounts computed by applying the federal
statutory rate to income before income taxes is summarized as follows:
(Dollars in thousands) 2014 2013 2012
U.S. federal statutory rate on earnings before
income taxes ......................... $588,303 35.0% $569,916 35.0% $524,088 35.0%
State income taxes, net of federal income tax
benefit ............................. 49,819 3.0 56,822 3.5 52,713 3.5
Jobs credits, net of federal income taxes ...... (18,961) (1.1) (19,348) (1.2) (16,062) (1.1)
Increase (decrease) in valuation allowances .... 1,453 0.1 (437) — (3,050) (0.2)
Decrease in income tax reserves ............ (6,449) (0.4) (6,391) (0.4) (13,676) (0.9)
Other, net ............................ 1,351 — 2,652 0.1 719 0.1
$615,516 36.6% $603,214 37.0% $544,732 36.4%
The 2014 effective tax rate was an expense of 36.6%. This expense was greater than the federal
statutory tax rate of 35% due primarily to the inclusion of state income taxes in the total effective tax
rate. The 2014 effective income tax rate decreased from 2013 due principally to the favorable resolution
of state income tax examinations and a reduction in other state income tax reserve increases. As in
prior years, the Company receives a significant income tax benefit related to salaries paid to certain
newly hired employees that qualify for federal jobs credits (principally the Work Opportunity Tax Credit
or ‘‘WOTC’’). The federal law authorizing the WOTC credit expired for employees hired after
December 31, 2014. Whether these credits will be available for employees hired after December 31,
2014 depends upon a change in the tax law that extends the expiration date of these credit provisions,
the certainty and timing of which are currently unclear.
The 2013 effective tax rate was an expense of 37.0%. The 2013 effective income tax rate increased
from 2012 due to the favorable resolution of income tax examinations during 2012 that did not reoccur,
to the same extent, in 2013. This rate increase was partially offset by the recording of an income tax
benefit in 2013 associated with the expiration of the assessment period during which the taxing
authorities could have assessed additional income tax associated with the Company’s 2009 tax year.
65