Nordstrom 2013 Annual Report Download - page 57

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Nordstrom, Inc. and subsidiaries 57
NOTE 14: INCOME TAXES
Income tax expense consists of the following:
Fiscal year 2013 2012 2011
Current income taxes:
Federal $379 $362 $359
State and local 64 66 63
Total current income tax expense 443 428 422
Deferred income taxes:
Federal 921 20
State and local 31 (6)
Total deferred income tax expense 12 22 14
Total income tax expense $455 $450 $436
A reconciliation of the statutory federal income tax rate to the effective tax rate on earnings before income taxes is as follows:
Fiscal year 2013 2012 2011
Statutory rate 35.0% 35.0% 35.0%
State and local income taxes, net of federal income taxes 3.6 3.6 3.6
Non-taxable acquisition-related items —— 0.6
Other, net (0.3) (0.6) (0.2)
Effective tax rate 38.3% 38.0% 39.0%
In 2011, we acquired HauteLook in a tax-free merger transaction. The non-taxability of certain acquisition-related items, including goodwill
impairment, resulted in an increase in our effective tax rate in 2011.
The major components of deferred tax assets and liabilities are as follows:
February 1, 2014 February 2, 2013
Compensation and benefits accruals $182 $177
Allowance for sales returns 56 51
Accrued expenses 48 43
Allowance for credit losses 32 33
Merchandise inventories 28 24
Gift cards and gift certificates 21 18
Gain on sale of interest rate swap 19 24
Loyalty reward certificates 18 22
Federal benefit of state taxes 67
Other 16 13
Total deferred tax assets 426 412
Land, buildings and equipment basis and depreciation differences (98) (90)
Debt exchange premium (24) —
Total deferred tax liabilities (122) (90)
Net deferred tax assets $304 $322
Table of Contents
Nordstrom, Inc.
Notes to Consolidated Financial Statements
Dollar and share amounts in millions except per share, per option and unit amounts