Big Lots 2014 Annual Report Download - page 145

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We have the following income tax loss and credit carryforwards at January 31, 2015 (amounts are shown net of tax excluding
the federal income tax effect of the state and local items):
(In thousands)
U.S. State and local:
State net operating loss carryforwards $ 144 Expires fiscal years 2020 through 2025
California enterprise zone credits 5,967 Predominately expires fiscal year 2023
Texas business loss credits 261 Expires fiscal years through 2025
Total income tax loss and credit carryforwards $ 6,372
Income taxes payable on our consolidated balance sheets have been reduced by the tax benefits primarily associated with share-
based compensation. We receive an income tax deduction upon the exercise of non-qualified stock options and the vesting of
restricted stock. Tax benefits of $1.2 million, $0.2 million, and $8.1 million in 2014, 2013, and 2012, respectively, were
credited directly to shareholders' equity related to share-based compensation deductions in excess of expense recognized for
these awards.
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for 2014, 2013, and 2012:
(In thousands) 2014 2013 2012
Unrecognized tax benefits - beginning of year $ 16,650 $ 16,019 $ 16,755
Gross increases - tax positions in current year 898 991 838
Gross increases - tax positions in prior period 820 1,247 1,626
Gross decreases - tax positions in prior period (2,418)(532)(1,928)
Settlements (488)(4)(382)
Lapse of statute of limitations (566)(949)(890)
Foreign currency translation 26 (122) —
Unrecognized tax benefits - end of year $ 14,922 $ 16,650 $ 16,019
At the end of 2014 and 2013, the total amount of unrecognized tax benefits that, if recognized, would affect the effective
income tax rate is $9.6 million and $11.0 million, respectively, after considering the federal tax benefit of state and local
income taxes of $4.7 million and $5.0 million, respectively. Unrecognized tax benefits of $0.6 million and $0.7 million in 2014
and 2013, respectively, relate to tax positions for which the ultimate deductibility is highly certain but for which there is
uncertainty about the timing of such deductibility. The uncertain timing items could result in the acceleration of the payment of
cash to the taxing authority to an earlier period.
We recognized an expense (benefit) associated with interest and penalties on unrecognized tax benefits of approximately $0.5
million, $0.5 million, and $(0.7) million during 2014, 2013, and 2012, respectively, as a component of income tax expense.
The amount of accrued interest and penalties recognized in the accompanying consolidated balance sheets at January 31, 2015
and February 1, 2014 was $6.0 million and $5.7 million, respectively.
We are subject to U.S. federal income tax, income tax of multiple state and local jurisdictions, and Canadian and provincial
taxes. The statute of limitations for assessments on our federal income tax returns for periods prior to 2011 has lapsed. In
addition, the state income tax returns filed by us are subject to examination generally for periods beginning with 2006, although
state income tax carryforward attributes generated prior to 2006 and non-filing positions may still be adjusted upon
examination. We have various state returns in the process of examination or administrative appeal. Generally, the time limit
for reassessing returns for Canadian and provincial income taxes for periods prior to the year ending October 4, 2009 have
lapsed.
We have estimated the reasonably possible expected net change in unrecognized tax benefits through January 30, 2016, based
on expected cash and noncash settlements or payments of uncertain tax positions and lapses of the applicable statutes of
limitations for unrecognized tax benefits. The estimated net decrease in unrecognized tax benefits for the next 12 months is
approximately $4.0 million. Actual results may differ materially from this estimate.