Dollar General 2014 Annual Report Download - page 141

10-K
DOLLAR GENERAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. Income taxes (Continued)
The Company has state net operating loss carry forwards as of January 30, 2015 that total
approximately $1.3 million which will expire in 2028. The Company also has state tax credit carry
forwards of approximately $17.0 million that will expire beginning in 2022 through 2025.
A valuation allowance has been provided for state tax credit carry forwards. The 2014 increase of
$1.5 million was recorded as an increase in income tax expense with the 2013 and 2012 decreases of
$0.4 million and $3.1 million, respectively, recorded as reductions 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 previously examined the Company’s 2009 and earlier
federal income tax returns. As a result, the 2009 and earlier tax years are not open for further
examination by the IRS. Due to the filing of an amended federal income tax return for the 2010 tax
year, the IRS may, to a limited extent, examine the Company’s 2010 income tax filings. The IRS, at its
discretion, may also choose to examine the Company’s 2011 through 2014 fiscal year income tax filings.
The Company has various state income tax examinations that are currently in progress. Generally, the
Company’s 2010 and later tax years remain open for examination by the various state taxing authorities.
As of January 30, 2015, accruals for uncertain tax benefits, interest expense related to income taxes
and potential income tax penalties were $9.3 million, $1.0 million and $0.4 million, respectively, for a
total of $10.7 million. This total amount is reflected in noncurrent Other liabilities in the consolidated
balance sheet.
As of January 31, 2014, accruals for uncertain tax benefits, interest expense related to income taxes
and potential income tax penalties were $19.6 million, $2.4 million and $0.4 million, respectively, for a
total of $22.4 million. Of this total amount, $3.6 million and $18.8 million are reflected in current
liabilities as Accrued expenses and other and in noncurrent Other liabilities, respectively, in the
consolidated balance sheet.
The Company believes that it is reasonably possible that the reserve for uncertain tax positions
may be reduced by approximately $3.0 million in the coming twelve months principally as a result of
the effective settlement of outstanding issues. Also, as of January 30, 2015, approximately $9.3 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) 2014 2013 2012
Income tax expense (benefit) ................... $(9,497) $(3,915) $(16,119)
Income tax related interest expense (benefit) ....... (1,445) 590 344
Income tax related penalty expense (benefit) ....... 51 30 (200)
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