Dollar Tree 2014 Annual Report Download - page 66

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50
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax assets and liabilities are
classified on the accompanying consolidated balance sheets based on the classification of the underlying asset or
liability. Significant components of the Company's net deferred tax assets (liabilities) follow:
(in millions)
January 31,
2015
February 1,
2014
Deferred tax assets:
Deferred rent $ 41.0 $ 38.2
Accrued expenses 37.6 34.2
Net operating losses and credit carryforwards 31.0 19.3
Accrued compensation expense 33.8 29.5
Other 5.1 0.6
Total deferred tax assets 148.5 121.8
Valuation allowance (13.8)(6.0)
Deferred tax assets, net 134.7 115.8
Deferred tax liabilities:
Property and equipment (48.7)(46.6)
Goodwill (18.7)(16.9)
Prepaid expenses (3.0)(3.7)
Inventory (5.4)(5.6)
Total deferred tax liabilities (75.8)(72.8)
Net deferred tax asset $ 58.9 $ 43.0
A valuation allowance of $13.8 million, net of federal tax benefits, has been provided principally for certain state credit
carryforwards and net operating loss carryforwards. In assessing the realizability of deferred tax assets, the Company considers
whether it is more likely than not that some portion or all of the deferred taxes will not be realized. Based upon the availability
of carrybacks of future deductible amounts to the past two years’ taxable income and the Company's projections for future
taxable income over the periods in which the deferred tax assets are deductible, the Company believes it is more likely than not
the remaining existing deductible temporary differences will reverse during periods in which carrybacks are available or in
which the Company generates net taxable income. Of the net operating losses and credit carryforwards, $10.1 million is
included in the valuation allowance and the remaining amounts expire between 2020 and 2035.
The company is participating in the Internal Revenue Service (“IRS”) Compliance Assurance Program (“CAP”) for the
2014 fiscal year and will participate in the program for fiscal year 2015. This program accelerates the examination of key
transactions with the goal of resolving any issues before the tax return is filed. Our federal tax returns have been examined and
all issues have been settled through our fiscal 2013 tax year. In addition, several states completed their examination during
fiscal 2014. In general, fiscal years 2011 and forward are within the statute of limitations for state tax purposes. The statute of
limitations is still open prior to 2011 for some states.