
	Fiscal Year
($ in millions)	2020		2019		2018
Current:
Federal	$	(337)	$	177	$	164
State	(21)		37		41
Foreign	58		44		49
Total current	(300)		258		254
Deferred:
Federal	(94)		(58)		55
State	(56)		(20)		11
Foreign	13		(3)		(1)
Total deferred	(137)		(81)		65
Total provision	$	(437)	$	177	$	319


	Fiscal Year
	2020		2019		2018
Federal statutory tax rate	21.0	%	21.0	%	21.0	%
State and local income taxes, net of federal benefit	4.6		3.2		4.0
Tax impact of foreign operations	(6.5)		6.0		0.1
Impact of foreign entity structure changes	10.3		—		—
Impact of the CARES Act of 2020	11.1		—		—
Impact of TCJA of 2017	—		5.6		(3.2)
Excess foreign tax credits	—		—		0.5

Other	(0.8)		(2.3)		1.7
Effective tax rate	39.7	%	33.5	%	24.1	%

On March 27, 2020, the CARES Act was signed into law in the United States. The CARES Act includes certain provisions that affect our income taxes, including temporary five-year net operating loss carryback provisions, modifications to the interest deduction limitations, and the technical correction for depreciation of qualified leasehold improvements.

During fiscal 2020, we recorded a $122 million benefit related to the CARES Act. We also recorded a $113 million benefit related to recognition of certain tax benefits associated with foreign entity structure changes.

On December 22, 2017, the TCJA was enacted into law, which significantly changed existing U.S. tax law and included numerous provisions that affect our business, such as imposing a one-time transition tax on deemed repatriation of deferred foreign income, reducing the U.S. federal statutory tax rate, and adopting a territorial tax system.

During fiscal 2019, we recorded a $30 million increase to our fiscal 2017 tax liability for additional guidance issued by the U.S. Treasury Department regarding the TCJA. In addition, the tax impact of foreign operations includes the effects of specific costs in certain foreign subsidiaries for which the Company was not permitted to recognize a tax benefit.

During fiscal 2018, we recorded a net $33 million measurement period adjustment to reduce our fiscal 2017 provisional estimated net charge related to the transition tax and recorded certain other immaterial measurement period adjustments to reduce our fiscal 2017 provisional estimated impact of the remeasurement of our deferred tax assets and liabilities to reflect the TCJA rate reduction.


($ in millions)	January 30, 2021		February 1, 2020
Gross deferred tax assets:

Operating lease liabilities	$	1,531	$	1,726
Accrued payroll and related benefits	71		59
Accruals	148		132
Inventory capitalization and other adjustments	48		38
Deferred income	22		34


Federal, state, and foreign net operating losses	252		101
Unrealized net loss on cash flow hedges	4		—
Other	71		37
Total gross deferred tax assets	2,147		2,127
Valuation allowance	(361)		(199)
Total deferred tax assets, net of valuation allowance	1,786		1,928
Deferred tax liabilities:
Depreciation and amortization	(217)		(246)
Operating lease assets	(1,188)		(1,448)

Unremitted earnings of certain foreign subsidiaries	(2)		(2)
Unrealized net gain on cash flow hedges	—		(2)
Other	(17)		(9)
Total deferred tax liabilities	(1,424)		(1,707)
Net deferred tax assets	$	362	$	221

As of January 30, 2021, we had approximately $1,040 million of state and $905 million of foreign loss carryovers in multiple taxing jurisdictions that could be utilized to reduce the tax liabilities of future years. We also had approximately $11 million of foreign tax credit carryovers as of January 30, 2021.

We provided a valuation allowance of approximately $189 million against the deferred tax assets related to the foreign loss carryovers. We also provided a valuation allowance of approximately $118 million related to other foreign deferred tax assets and $11 million related to foreign tax credit carryovers.

The state losses expire between fiscal 2021 and fiscal 2040. Approximately $266 million of the foreign losses expire between fiscal 2021 and fiscal 2040, and $639 million of the foreign losses do not expire. The foreign tax credits begin to expire in fiscal 2029.


	Fiscal Year
($ in millions)	2020		2019		2018
Balance at beginning of fiscal year	$	152	$	136	$	118
Increases related to current year tax positions	165		12		11
Prior year tax positions:
Increases	40		11		29
Decreases	(4)		(4)		(6)
Lapse of Statute of Limitations	(1)		(1)		—
Cash settlements	(14)		(1)		(15)
Foreign currency translation	2		(1)		(1)
Balance at end of fiscal year	$	340	$	152	$	136

Of the $340 million, $152 million, and $136 million of total unrecognized tax benefits as of January 30, 2021, February 1, 2020, and February 2, 2019, respectively, approximately $323 million, $137 million, and $125 million, respectively, represents the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods.

During fiscal 2020, 2019, and 2018, interest expense of $12 million, $6 million, and $5 million, respectively, was recognized on the Consolidated Statements of Operations relating to income tax liabilities.

As of January 30, 2021 and February 1, 2020, the Company had total accrued interest related to income tax liabilities of $30 million and $16 million, respectively. There were no accrued penalties related to income tax liabilities as of January 30, 2021 or February 1, 2020.

The Company conducts business globally, and as a result, files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as the United States, Canada, France, the United Kingdom, China, Hong Kong, Japan, and India. We are no longer subject to U.S. federal income tax examinations for fiscal years before 2009, and with few exceptions, we also are no longer subject to U.S. state, local, or non-U.S. income tax examinations for fiscal years before 2010.

The Company engages in continual discussions with taxing authorities regarding tax matters in the various U.S. and foreign jurisdictions in the normal course of business. As of January 30, 2021, it is reasonably possible that we will recognize a decrease in gross unrecognized tax benefits within the next 12 months of up to $3 million, primarily due to the closing of audits. If we do recognize such a decrease, the net impact on the Consolidated Statements of Operations would not be material.