Macy's 2009 Annual Report Download - page 78

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
During the fourth quarter of 2007, the Company settled an IRS examination for fiscal years 2005, 2004 and
2003. As a result of the settlement, the Company recognized previously unrecognized tax benefits and related
accrued interest totaling $78 million, primarily attributable to losses related to the disposition of a former
subsidiary.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
deferred tax liabilities are as follows:
January 30,
2010
January 31,
2009
(millions)
Deferred tax assets:
Post employment and postretirement benefits .................... $ 645 $ 654
Accrued liabilities accounted for on a cash basis for tax purposes .... 306 276
Long-term debt ............................................ 128 144
Unrecognized state tax benefits and accrued interest ............... 100 105
Federal operating loss carryforwards ........................... – 7
State operating loss carryforwards ............................. 56 55
Other .................................................... 119 95
Valuation allowance ........................................ (28) (33)
Total deferred tax assets ................................. 1,326 1,303
Deferred tax liabilities:
Excess of book basis over tax basis of property and equipment ...... (1,856) (1,950)
Merchandise inventories ..................................... (441) (442)
Intangible assets ........................................... (125) (94)
Other .................................................... (178) (158)
Total deferred tax liabilities .............................. (2,600) (2,644)
Net deferred tax liability ................................. $(1,274) $(1,341)
The valuation allowance of $28 million at January 30, 2010 and $33 million at January 31, 2009 relates to
net deferred tax assets for state net operating loss carryforwards. The net change in the valuation allowance
amounted to a decrease of $5 million for 2009 and an increase of $14 million for 2008.
As of January 30, 2010, the Company had no federal net operating loss carryforwards and state net
operating loss carryforwards, net of valuation allowance, of approximately $816 million, which will expire
between 2010 and 2030.
The Company adopted the provisions of FASB Interpretation (“FIN”) No. 48, “Accounting for Uncertainty
in Income Taxes – An Interpretation of FASB Statement No. 109,” which is now included in ASC Topic 740,
“Income Taxes,” on February 4, 2007. The adoption of this guidance resulted in a net increase to accruals for
uncertain tax positions of $1 million, an increase to the beginning balance of accumulated equity of $1 million
and an increase to goodwill of $2 million.
F-30