Nordstrom 2011 Annual Report Download - page 60

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60
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts
The major components of deferred tax assets and liabilities are as follows:
A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2011, 2010 and 2009 is as follows:
Settlement activity in 2011 includes amounts paid for a state tax matter and to close our 2008 IRS audit.
At the end of 2011, 2010 and 2009, $11, $21 and $18 of the ending gross unrecognized tax benefit relates to items which, if recognized, would affect the
effective tax rate.
Our income tax expense included a decrease to expense of $4 in 2011 and an increase to expense of $5 in 2010 and $2 in 2009 for tax-related interest
and penalties. At the end of 2011, 2010 and 2009, our liability for interest and penalties was $5, $11 and $7.
We file income tax returns in the U.S. and a limited number of foreign jurisdictions. With few exceptions, we are no longer subject to federal, state
and local, or non-U.S. income tax examinations for years before 2007. Unrecognized tax benefits related to federal, state and local tax positions may
decrease by $3 by February 2, 2013, due to the completion of examinations and the expiration of various statutes of limitations.
January 28, 2012 January 29, 2011
Compensation and benefits accruals $167
$146
Accrued expenses 86
75
Merchandise inventories 22
25
Gift cards and gift certificates 17
18
Loyalty reward certificates 17
17
Allowance for credit losses 45
56
Federal benefit of state taxes 6
9
Gain on sale of interest rate swap 29
-
Other 17
14
Total deferred tax assets 406
360
Land, buildings and equipment basis and
depreciation differences (63)
(4)
Total deferred tax liabilities (63)
(4)
Net deferred tax assets $343
$356
Fiscal year 2011 2010 2009
Unrecognized tax benefit at beginning of year $43 $43 $28
Gross increase to tax positions in prior periods 14 3 18
Gross decrease to tax positions in prior periods (14) (3) (3)
Gross increase to tax positions in current period 2 3 3
Settlements (24) (3) (3)
Unrecognized tax benefit at end of year $21 $43 $43