Macy's 2015 Annual Report Download - page 74

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-25
Changes in workers’ compensation and general liability reserves, including the current portion, are as follows:
2015 2014 2013
(millions)
Balance, beginning of year....................................................................... $ 505 $ 497 $ 497
Charged to costs and expenses ................................................................. 159 160 147
Payments, net of recoveries...................................................................... (156)(152)(147)
Balance, end of year ................................................................................. $ 508 $ 505 $ 497
The non-current portion of workers’ compensation and general liability reserves is included in other liabilities on the
Consolidated Balance Sheets. At January 30, 2016 and January 31, 2015, workers’ compensation and general liability
reserves included $107 million of liabilities which are covered by deposits and receivables included in current assets on the
Consolidated Balance Sheets.
8. Taxes
Income tax expense is as follows:
2015 2014 2013
Current Deferred Total Current Deferred Total Current Deferred Total
(millions)
Federal .......................... $ 536 $ — $ 536 $ 743 $ 28 $ 771 $ 834 $ (76) $ 758
State and local............... 72 — 72 92 1 93 105 (59) 46
$ 608 $ — $ 608 $ 835 $ 29 $ 864 $ 939 $ (135) $ 804
The income tax expense reported differs from the expected tax computed by applying the federal income tax
statutory rate of 35% for 2015, 2014 and 2013 to income before income taxes. The reasons for this difference and their tax
effects are as follows:
2015 2014 2013
(millions)
Expected tax ............................................................................................. $ 588 $ 836 $ 801
State and local income taxes, net of federal income tax benefit .............. 43 59 45
Historic rehabilitation tax credit............................................................... (12)(20)(16)
Change in valuation allowance ................................................................ 3 1 (16)
Other......................................................................................................... (14)(12)(10)
$ 608 $ 864 $ 804
The Company participates in the Internal Revenue Service (“IRS”) Compliance Assurance Program ("CAP"). As
part of the CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing
of the tax return. The IRS has completed examinations of 2014 and all prior tax years.