Big Lots 2015 Annual Report Download - page 142

65
We have the following income tax loss and credit carryforwards at January 30, 2016 (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 $ 82 Expires fiscal years 2020 through 2025
California enterprise zone credits 6,245 Predominately expires fiscal year 2023
Other state credits 298 Expires fiscal years through 2025
Total income tax loss and credit carryforwards $ 6,625
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 $0.7 million, $1.2 million, and $0.2 million in 2015, 2014, and 2013, 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 2015, 2014, and 2013:
(In thousands) 2015 2014 2013
Unrecognized tax benefits - beginning of year $ 14,922 $ 16,650 $ 16,019
Gross increases - tax positions in current year 939 898 991
Gross increases - tax positions in prior period 872 820 1,247
Gross decreases - tax positions in prior period (430)(2,418)(532)
Settlements (732)(488)(4)
Lapse of statute of limitations (1,799)(566)(949)
Foreign currency translation — 26 (122)
Unrecognized tax benefits - end of year $ 13,772 $ 14,922 $ 16,650
At the end of 2015 and 2014, the total amount of unrecognized tax benefits that, if recognized, would affect the effective
income tax rate is $8.9 million and $9.6 million, respectively, after considering the federal tax benefit of state and local income
taxes of $4.3 million and $4.7 million, respectively. Unrecognized tax benefits of $0.5 million and $0.6 million in 2015 and
2014, 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 $0.1
million, $0.5 million, and $0.5 million during 2015, 2014, and 2013, respectively, as a component of income tax expense. The
amount of accrued interest and penalties recognized in the accompanying consolidated balance sheets at January 30, 2016 and
January 31, 2015 was $6.1 million and $6.0 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 2012 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 ended October 3, 2010 have
lapsed.
We have estimated the reasonably possible expected net change in unrecognized tax benefits through January 28, 2017, 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 $3.0 million. Actual results may differ materially from this estimate.