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Income Taxes
12 Months Ended
Jan. 29, 2021
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes:
Substantially all of the Company’s income before income taxes for the three years ended January 29, 2021 is subject to taxation in the United States. The provision for income taxes for each of the periods presented include the following:
Year Ended
January 29,
2021
January 31,
2020
February 1,
2019
(in millions)
Current:
Federal$34 $10 $
State14 10 
Deferred:
Federal10 32 17 
State2 12 
Total$60 $57 $33 
A reconciliation of the provision for income taxes to the amount computed by applying the statutory federal income tax rate to income before income taxes for each of the periods presented follows:
Year Ended
January 29,
2021
January 31,
2020
February 1,
2019
(in millions)
Amount computed at the statutory federal income tax rate$57 $60 $36 
State income taxes, net of federal tax benefit13 14 
Research and development and other federal credits(8)(11)(8)
Non-deductible compensation3 
Non-deductible acquisition costs — 
Excess tax benefits for stock-based compensation(3)(4)(9)
Other(2)(4)(1)
Total$60 $57 $33 
Effective income tax rate22.1 %20.0 %19.4 %
The effective income tax rate for fiscal 2021 is higher than fiscal 2020 primarily due to less research and development credits in fiscal 2021 because fiscal year 2020 included the benefit from multiple years and smaller excess tax benefits from stock-based compensation in fiscal 2021. In fiscal 2020, we recognized $6 million of tax benefits related to research and development credits for fiscal years 2016 - 2019 and $5 million related to the 2020 tax year. The effective income tax rate for fiscal 2020 is consistent with the rate in fiscal 2019 due to smaller excess tax benefits from stock-based compensation were partially offset by increased research and development credits in fiscal 2020.
Deferred income taxes are recorded for differences in the basis of assets and liabilities for financial reporting purposes and tax reporting purposes. Deferred tax assets (liabilities) were comprised of:
January 29,
2021
January 31,
2020
(in millions)
Accrued vacation and bonuses$33 $21 
Accrued liabilities16 20 
Deferred compensation20 23 
Stock awards11 11 
Net operating loss and other carryforwards105 117 
Fixed asset basis differences 
Deferred revenue14 — 
Lease liability65 54 
Payroll tax deferral11 — 
Accumulated other comprehensive loss30 23 
Valuation allowance(7)(5)
Total deferred tax assets298 266 
Deferred revenue (1)
Purchased intangible assets(198)(177)
Fixed asset basis difference(4)— 
Right of use assets(61)(48)
Total deferred tax liabilities(263)(226)
Net deferred tax assets$35 $40 
 
Net deferred tax assets are presented in other assets on the consolidated balance sheets. Deferred tax assets for both periods presented include state tax credit carryforwards for which the Company has set up a valuation allowance.
The changes in the unrecognized tax benefits, excluding accrued interest and penalties, were:
Year Ended
January 29,
2021
January 31,
2020
February 1,
2019
(in millions)
Unrecognized tax benefits at beginning of the year$51 $13 $
Additions for acquired unrecognized tax benefits — 
Additions for tax positions related to prior years8 32 
Additions for tax positions related to the current year9 
Reductions for prior year tax positions related to statute expiration(2)(2)— 
Unrecognized tax benefits at end of the year$66 $51 $13 
Unrecognized tax benefits that, if recognized, would affect the effective income tax rate$66 $48 $
Over the next 12 months, the Company does not expect a significant increase or decrease in the unrecognized tax benefits recorded at January 29, 2021. During the year ended January 29, 2021, we recognized an increase in unrecognized tax benefits of approximately $17 million related to an increase in available tax credits in fiscal year 2021. The Company recognizes net interest and penalties as a component of income tax expense and for the periods presented, there was not a material amount of current interest and penalties recognized.
The Company has filed income tax returns in the U.S. and various state jurisdictions, which may be subject to routine compliance reviews by the Internal Revenue Service ("IRS") and other taxing authorities. While the Company believes it has adequate accruals for uncertain tax positions, the tax authorities may determine that the Company owes taxes in excess of recorded accruals or the recorded accruals may be in excess of the final settlement amounts agreed to by tax authorities. The Company’s tax returns for fiscal years 2016 through 2020 remain subject to examination by the IRS and various other tax jurisdictions. The Company is currently under examination by the IRS for fiscal years 2016 and 2017. The Company is also subject to examination for the returns of Engility from calendar year 2016 through the short pre-acquisition period ended January 13, 2019, although net operating losses from all years are subject to examinations and adjustments for at least three years following the year in which the attribute is used. The Company is responsible for Engility's tax liabilities relating to all open pre and post acquisition years.
As of January 29, 2021, the Company has approximately $383 million of federal loss carryforward, $14 million of state loss carryforwards and approximately $8 million of state credit carryforwards that will begin to expire in fiscal 2026. The valuation allowance of $7 million relates to these state carryforwards.