Macy's 2012 Annual Report Download - page 70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-23
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax
liabilities are as follows:
February 2,
2013 January 28, 2012
(millions)
Deferred tax assets
Post employment and postretirement benefits ......................................................... $ 476 $ 559
Accrued liabilities accounted for on a cash basis for tax purposes.......................... 237 227
Long-term debt......................................................................................................... 96 109
Unrecognized state tax benefits and accrued interest............................................... 71 77
State operating loss and credit carryforwards .......................................................... 60 63
Other......................................................................................................................... 177 151
Valuation allowance................................................................................................. (39)(41)
Total deferred tax assets.................................................................................... 1,078 1,145
Deferred tax liabilities
Excess of book basis over tax basis of property and equipment.............................. (1,665)(1,733)
Merchandise inventories .......................................................................................... (577)(531)
Intangible assets ....................................................................................................... (230)(195)
Other......................................................................................................................... (251)(235)
Total deferred tax liabilities.............................................................................. (2,723)(2,694)
Net deferred tax liability ................................................................................... $ (1,645) $ (1,549)
The valuation allowance at February 2, 2013 and January 28, 2012 relates to net deferred tax assets for state net operating
loss and credit carryforwards. The net change in the valuation allowance amounted to a decrease of $2 million for 2012 and a
decrease of $3 million for 2011.
As of February 2, 2013, the Company had no federal net operating loss carryforwards and state net operating loss and
credit carryforwards of $1,049 million, which will expire between 2013 and 2032.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
February 2,
2013 January 28, 2012 January 29, 2011
(millions)
Balance, beginning of year...................................................................... $ 179 $ 205 $ 207
Additions based on tax positions related to the current year................... 18 23 19
Additions for tax positions of prior years................................................ 18 — —
Reductions for tax positions of prior years.............................................. (19)(21)(8)
Settlements .............................................................................................. (9)(15)(4)
Statute expirations ................................................................................... (17)(13)(9)
Balance, end of year ................................................................................ $ 170 $ 179 $ 205
Amounts recognized in the Consolidated Balance Sheets at
February 2, 2013, January 28, 2012 and January 29, 2011
Current income taxes........................................................................ $ 20 $ 18 $ 11
Long-term deferred income taxes .................................................... 23 27 24
Other liabilities................................................................................. 127 134 170
$ 170 $ 179 $ 205
As of February 2, 2013 and January 28, 2012, the amount of unrecognized tax benefits, net of deferred tax assets, that, if
recognized would affect the effective income tax rate, was $111 million and $116 million, respectively.