Whole Foods 2014 Annual Report Download - page 51

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48
Actual income tax expense for the fiscal years indicated differed from the amount computed by applying statutory corporate
income tax rates to income before income taxes as follows (in millions):
2014 2013 2012
Federal income tax based on statutory rates $ 331 $ 313 $ 263
Increase (reduction) in income taxes resulting from:
Tax-exempt interest (1) (1) (1)
Excess charitable contributions (8) (7) (5)
Federal income tax credits (3) (2) (2)
Other, net 2 — 1
Total federal income taxes 321 303 256
State income taxes, net of federal income tax benefit 47 41 31
Tax impact of foreign operations (1) (1) (1)
Total income tax expense $ 367 $ 343 $ 286
Current income taxes receivable totaled approximately $1 million and $7 million at September 28, 2014 and September 29,
2013, respectively.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities
were as follows (in millions):
September 28,
2014 September 29,
2013
Deferred tax assets:
Compensation-related costs $ 159 $ 122
Insurance-related costs 53 48
Inventories — 1
Lease and other termination accruals 13 15
Rent differential 156 139
Tax basis of fixed assets in excess of book basis 9 7
Net domestic and international operating loss carryforwards 20 18
Other 8 5
Gross deferred tax assets 418 355
Valuation allowance (30) (26)
Deferred tax assets 388 329
Deferred tax liabilities:
Financial basis of fixed assets in excess of tax basis (79) (102)
Inventories (5) —
Capitalized costs expensed for tax purposes (4) (4)
Deferred tax liabilities (88) (106)
Net deferred tax asset $ 300 $ 223
Deferred taxes have been classified on the Consolidated Balance Sheets as follows (in millions):
September 28,
2014 September 29,
2013
Current assets $ 168 $ 151
Noncurrent assets 132 72
Net deferred tax asset $ 300 $ 223
At September 28, 2014, the Company had international operating loss carryforwards totaling approximately $101 million, all
of which have an indefinite life. The Company provided a valuation allowance totaling approximately $30 million for deferred
tax assets associated with international operating loss carryforwards, federal credit carryforwards, and deferred tax assets
associated with unrecognized tax benefits, for which management has determined it is more likely than not that the deferred tax
asset will not be realized. Management believes that it is more likely than not that we will fully realize the remaining domestic
deferred tax assets in the form of future tax deductions based on the nature of these deductible temporary differences and a
history of profitable operations.