Nordstrom 2009 Annual Report Download - page 62

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54
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
NOTE 12: INCOME TAXES
Income tax expense consists of the following:
Fiscal year 2009 2008 2007
Current income taxes:
Federal $275
$244
$435
State and local 38
39
65
Total current income tax expense 313 283 500
Deferred income taxes:
Current (28) (29) (24)
Non-current (30) (7) (18)
Total deferred income tax benefit (58) (36) (42)
Total income tax expense $255 $247 $458
A reconciliation of the statutory Federal income tax rate to the effective tax rate on earnings before income taxes is as follows:
Fiscal year 2009 2008 2007
Statutory rate 35.0% 35.0% 35.0%
State and local income taxes, net of federal
income taxes 3.5 3.4 3.4
Deferred tax adjustment (1.8) (3.2) -
Permanent differences (0.6) 2.0 -
Other, net 0.5 0.9 0.6
Effective tax rate 36.6% 38.1% 39.0%
In 2009 and 2008, the IRS completed its routine examination of our federal filings for the 2007 and 2002 through 2006 years, respectively.
As a result of adjustments identified in the IRS examinations and revisions of estimates, we increased our deferred tax assets, which resulted
in a reduction in our effective tax rate in 2009 and 2008.
The major components of deferred tax assets and liabilities are as follows:
January 30, 2010 January 31, 2009
Compensation and benefits accruals $123 $99
Accrued expenses 67 63
Merchandise inventories 24 26
Land, buildings and equipment basis and
depreciation differences 13 7
Gift cards and gift certificates 18 17
Loyalty reward certificates 12 11
Allowance for doubtful accounts 74 54
Federal benefit of state taxes 11 10
Other 11 2
Total deferred tax assets 353 289
Total deferred tax liabilities – -
Net deferred tax assets $353 $289