The Gap 2014 Annual Report Download - page 73
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61
For financial reporting purposes, components of income before income taxes are as follows:
Fiscal Year
($ in millions) 2014 2013 2012
United States $ 1,842 $ 1,817 $ 1,692
Foreign 171 276 169
Income before income taxes $ 2,013 $ 2,093 $ 1,861
The provision for income taxes consists of the following:
Fiscal Year
($ in millions) 2014 2013 2012
Current:
Federal $ 547 $ 616 $ 617
State 61 65 56
Foreign 68 63 90
Total current 676 744 763
Deferred:
Federal 70 76 (37)
State 6 — (6)
Foreign (1) (7) 6
Total deferred 75 69 (37)
Total provision $ 751 $ 813 $ 726
The difference between the effective tax rate and the U.S. federal statutory tax rate is as follows:
Fiscal Year
2014 2013 2012
Federal statutory tax rate 35.0% 35.0% 35.0%
State and local income taxes, net of federal benefit 3.3 3.1 2.7
Tax impact of foreign operations 1.0 0.8 2.0
Excess foreign tax credits (2.0) — —
Other — (0.1) (0.7)
Effective tax rate 37.3% 38.8% 39.0%
In connection with a review of the Company’s overall cash position and anticipated cash needs, we made a $473
million distribution of certain foreign earnings in fiscal 2014, resulting in an overall net tax benefit of approximately
$41 million. The benefit is primarily due to the recognition of foreign tax credits which exceeded the taxes due on
the distribution of foreign earnings.