HD » Topics » Income Taxes

These excerpts taken from the HD 10-K filed Apr 2, 2009.
Income Taxes
 
The Company provides for federal, state and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal, state and foreign tax benefits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date.
 
The Company and its eligible subsidiaries file a consolidated U.S. federal income tax return. Non-U.S. subsidiaries and certain U.S. subsidiaries, which are consolidated for financial reporting purposes, are not eligible to be included in the Company’s consolidated U.S. federal income tax return. Separate provisions for income taxes have been determined for these entities. The Company intends to reinvest substantially all of the unremitted earnings of its non-U.S. subsidiaries and postpone their remittance indefinitely. Accordingly, no provision for U.S. income taxes for these non-U.S. subsidiaries was recorded in the accompanying Consolidated Statements of Earnings.
 
Income
Taxes



 



The Company provides for federal, state and foreign income taxes
currently payable, as well as for those deferred due to timing
differences between reporting income and expenses for financial
statement purposes versus tax purposes. Federal, state and
foreign tax benefits are recorded as a reduction of income
taxes. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to temporary
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted
income tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. The effect of a change in income tax rates
is recognized as income or expense in the period that includes
the enactment date.


 



The Company and its eligible subsidiaries file a consolidated
U.S. federal income tax return.
Non-U.S. subsidiaries
and certain U.S. subsidiaries, which are consolidated for
financial reporting purposes, are not eligible to be included in
the Company’s consolidated U.S. federal income tax
return. Separate provisions for income taxes have been
determined for these entities. The Company intends to reinvest
substantially all of the unremitted earnings of its
non-U.S. subsidiaries
and postpone their remittance indefinitely. Accordingly, no
provision for U.S. income taxes for these
non-U.S. subsidiaries
was recorded in the accompanying Consolidated Statements of
Earnings.


 




These excerpts taken from the HD 10-K filed Apr 3, 2008.

Income Taxes

The Company provides for federal, state and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal, state and foreign tax benefits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date.

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The Company and its eligible subsidiaries file a consolidated U.S. federal income tax return. Non-U.S. subsidiaries and certain U.S. subsidiaries, which are consolidated for financial reporting purposes, are not eligible to be included in the Company's consolidated U.S. federal income tax return. Separate provisions for income taxes have been determined for these entities. The Company intends to reinvest substantially all of the unremitted earnings of its non-U.S. subsidiaries and postpone their remittance indefinitely. Accordingly, no provision for U.S. income taxes for these non-U.S. subsidiaries was recorded in the accompanying Consolidated Statements of Earnings.

Income Taxes



The Company provides for federal, state and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and
expenses for financial statement purposes versus tax purposes. Federal, state and foreign tax benefits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date.



39









The
Company and its eligible subsidiaries file a consolidated U.S. federal income tax return. Non-U.S. subsidiaries and certain U.S. subsidiaries, which are consolidated for
financial reporting purposes, are not eligible to be included in the Company's consolidated U.S. federal income tax return. Separate provisions for income taxes have been determined for these
entities. The Company intends to reinvest substantially all of the unremitted earnings of its non-U.S. subsidiaries and postpone their remittance indefinitely. Accordingly, no provision
for U.S. income taxes for these non-U.S. subsidiaries was recorded in the accompanying Consolidated Statements of Earnings.



This excerpt taken from the HD 10-Q filed Nov 28, 2007.

4.  INCOME TAXES

 

On January 29, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109” (“FIN 48”). Among other things, FIN 48 requires application of a “more likely than not” threshold to the recognition and derecognition of tax positions. It further requires that a change in judgment related to prior years’ tax positions be recognized in the quarter of such change.  The adoption of FIN 48 reduced the Company’s Retained Earnings by $111 million.  As a result of the implementation, the gross amount of unrecognized tax benefits at January 29, 2007 totaled $667 million.

 

During the third quarter and first nine months of fiscal 2007, the Company increased its unrecognized tax benefits by approximately $14 million and $45 million, respectively, for tax positions taken during those periods.  During the third quarter and first nine months of fiscal 2007, the Company decreased its unrecognized tax benefits by approximately $59 million and $37 million, respectively, for positions taken related to prior periods. The Company also settled liabilities of approximately $45 million and $52 million during the third quarter and first nine months of fiscal 2007, respectively, which resulted in a benefit of approximately $35 million in the third quarter of fiscal 2007.  The gross amount of unrecognized tax benefits as of October 28, 2007 totaled $577 million, which includes $353 million of net unrecognized tax benefits that, if recognized, would affect the annual effective income tax rate.

 

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During the third quarter of fiscal 2007, the Company decreased its interest accrual associated with uncertain tax positions by approximately $5 million and increased the accrual for the first nine months of fiscal 2007 by $23 million.  Additionally, the Company paid approximately $3 million and $8 million, respectively, of interest associated with uncertain tax positions for those same periods.  There have been no penalty accruals during the first nine months of fiscal 2007.  Interest and penalties are included in net interest expense and operating expenses, respectively.  Our classification of interest and penalties did not change as a result of the adoption of FIN 48.

 

The U.S. Internal Revenue Service (“IRS”) completed its audit of our consolidated income tax returns for 2003 and 2004, and continues its review of certain pre-acquisition returns for the years 2003, 2004 and 2005.  In addition, certain other tax deficiency issues and refund claims for previous years remain unresolved.  The Canadian governments, including various provinces, are currently auditing income tax returns for the years 2001 to 2004.  There are U.S. state and local audits covering tax years 2001 to 2005. The Company anticipates that few of these audits will be fully resolved during fiscal 2007.

 

The Company believes that some individual adjustments from the completed IRS audit and other audits may be agreed upon within the next twelve months.  Accordingly, the Company has classified approximately $18 million of the reserve for unrecognized tax benefits as a short-term liability in the accompanying Consolidated Balance Sheets.  Final settlement of these audit issues may result in payments that are more or less than this amount, but the Company does not anticipate the resolution of these matters will result in a material change to its consolidated financial position or results of operations.

 

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THE HOME DEPOT, INC. AND SUBSIDIARIES

This excerpt taken from the HD 10-Q filed Sep 4, 2007.

4.  INCOME TAXES

On January 29, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” (“FIN 48”). Among other things, FIN 48 requires application of a “more likely than not” threshold to the recognition and derecognition of tax positions. It further requires that a change in judgment related to prior years’ tax positions be recognized in the quarter of such change.  The January 29, 2007 adoption of FIN 48 reduced the Company’s Retained Earnings by $111 million.

During the second quarter and first six months of fiscal 2007, the Company increased its unrecognized tax benefits by approximately $16 million and $32 million, respectively, for tax positions taken during those periods.  During the second quarter and first six months of fiscal 2007, the Company increased its unrecognized tax benefits by approximately $24 million for positions taken related to prior periods. The Company also settled liabilities of $8 million and $20 million during the second quarter and first six months of fiscal 2007, respectively, which resulted in an insignificant income statement impact.  The gross amount of unrecognized tax benefits as of July 29, 2007 totaled $703 million, which includes $433 million of net unrecognized tax benefits that, if recognized, would affect the annual effective income tax rate.

During the second quarter and first six months of fiscal 2007, the Company accrued approximately $14 million and $28 million, respectively, in additional interest expense and paid less than $1 million and $5 million, respectively, of interest associated with uncertain tax positions for those same periods.  There have been no penalty accruals during the first six months of fiscal 2007.  Interest and penalties are not included as a component of Provision for Income Taxes, but are included in net interest expense and operating expenses, respectively.  Our classification of interest and penalties did not change as a result of the adoption of FIN 48.

The U.S. Internal Revenue Service (“IRS”) completed its audit of our consolidated income tax returns for 2003 and 2004, and continues its review of certain subsidiary pre-acquisition returns for the years 2003, 2004 and 2005.  In addition, certain other tax deficiency issues and refund claims for previous years remain unresolved.  The Canadian governments, including the provinces of Alberta, British Columbia, Ontario and Quebec, are currently auditing income tax returns for the years 2001 to 2004.  There are U.S. state and local audits covering tax years 1994 to 2005. The Company anticipates that few of these audits will be fully resolved during fiscal 2007.

The Company believes that some individual adjustments from the completed IRS audit and other audits may be agreed upon within the next twelve months.  Accordingly, the Company has classified approximately $84 million of the reserve for unrecognized tax benefits as a short-term liability in the accompanying Consolidated Balance Sheets.  Final settlement of these audit issues may result in payments that are more or less than this amount, but the Company does not anticipate the resolution of these matters will result in a material change to its consolidated financial position or results of operations.

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This excerpt taken from the HD 10-Q filed Jun 6, 2007.

3.   INCOME TAXES

On January 29, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” (“FIN 48”).  Among other things, FIN 48 requires application of a “more likely than not” threshold to the recognition and derecognition of tax positions. It further requires that a change in judgment related to prior years’ tax positions be recognized in the quarter of such change.  The January 29, 2007 adoption of FIN 48 reduced the Company’s Retained Earnings by $111 million.  As a result of the implementation, the gross amount of unrecognized tax benefits totaled $694 million and the Company’s opening accrual for interest and penalties is $123 million.  There are $539 million of unrecognized tax benefits included in the balance at January 29, 2007 whose resolution would affect the annual effective income tax rate. 

During the three months ended April 29, 2007, the Company increased its unrecognized tax benefits by approximately $16 million for tax positions taken during the first quarter of fiscal 2007.  The Company also settled liabilities of $12 million during the first quarter of fiscal 2007 which resulted in an insignificant income statement impact.  During this same period, the Company accrued approximately $14 million in additional interest expense and paid $5 million of interest associated with uncertain tax positions.

The Company is under examination by the U.S. Internal Revenue Service, Canada Revenue Agency and the provinces of Ontario and Quebec, and many U.S. state and local tax authorities.  The U.S. Internal Revenue Service is currently auditing our consolidated income tax returns for 2003 and 2004, as well as certain subsidiary pre-acquisition returns for the years 2003, 2004 and 2005.  In addition, certain other tax deficiency issues and refund claims for previous years remain unresolved.  The Canadian governments are currently auditing income tax returns for the years 2001 to 2004.  There are U.S. state and local audits covering tax years 1994 to 2005.

The Company anticipates that few of these audits will be fully resolved during 2007.  However, the Company does believe that some individual audits or issues may be agreed upon within the next 12 months.  Accordingly, the Company has classified approximately $57 million of the reserve for unrecognized tax benefits as a short term liability in the accompanying Consolidated Balance Sheets.  The Company does not anticipate the resolution of these matters will result in a material change to its consolidated financial condition or results of operations.

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This excerpt taken from the HD 10-K filed Mar 29, 2007.

Income Taxes

The Company provides for federal, state and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal, state and foreign tax benefits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date.

The Company and its eligible subsidiaries file a consolidated U.S. federal income tax return. Non-U.S. subsidiaries and certain U.S. subsidiaries, which are consolidated for financial reporting purposes, are not eligible to be included in the Company's consolidated U.S. federal income tax return. Separate provisions for income taxes have been determined for these entities. The Company intends to reinvest the unremitted earnings of its non-U.S. subsidiaries and postpone their remittance indefinitely. Accordingly, no provision for U.S. income taxes for non-U.S. subsidiaries was recorded in the accompanying Consolidated Statements of Earnings.

This excerpt taken from the HD 8-K filed Jun 23, 2006.

Income Taxes

The Company provides for federal, state and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal, state and foreign tax benefits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing

7




 

assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date.

The Company and its eligible subsidiaries file a consolidated U.S. federal income tax return. Non-U.S. subsidiaries and certain U.S. subsidiaries, which are consolidated for financial reporting purposes, are not eligible to be included in the Company’s consolidated U.S. federal income tax return. Separate provisions for income taxes have been determined for these entities. The Company intends to reinvest the unremitted earnings of its non-U.S. subsidiaries and postpone their remittance indefinitely. Accordingly, no provision for U.S. income taxes for non-U.S. subsidiaries was recorded in the accompanying Consolidated Statements of Earnings.

The American Jobs Creation Act of 2004 (“AJC Act”) provides a one-time 85% dividends-received deduction that applies to qualified cash dividends received from controlled foreign corporations if the funds are reinvested in the United States. The deduction can result in an effective income tax rate of 5.25% on the repatriation of foreign earnings, a rate much lower than the normal statutory tax rate of 35%. The Company has determined that it will not repatriate earnings of foreign subsidiaries under the AJC Act.

The AJC Act also provides a new deduction for qualified domestic production activities. When fully phased-in, the deduction will be up to 9% of the lesser of qualified production activities income or taxable income. Because this provision is targeted toward manufacturing activities, the Company does not expect to recognize a material benefit in the current or future tax years.

This excerpt taken from the HD 10-K filed Mar 29, 2006.

Income Taxes

The Company provides for federal, state and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal, state and foreign tax benefits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing

41



assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date.

The Company and its eligible subsidiaries file a consolidated U.S. federal income tax return. Non-U.S. subsidiaries and certain U.S. subsidiaries, which are consolidated for financial reporting purposes, are not eligible to be included in the Company's consolidated U.S. federal income tax return. Separate provisions for income taxes have been determined for these entities. The Company intends to reinvest the unremitted earnings of its non-U.S. subsidiaries and postpone their remittance indefinitely. Accordingly, no provision for U.S. income taxes for non-U.S. subsidiaries was recorded in the accompanying Consolidated Statements of Earnings.

The American Jobs Creation Act of 2004 ("AJC Act") provides a one-time 85% dividends-received deduction that applies to qualified cash dividends received from controlled foreign corporations if the funds are reinvested in the United States. The deduction can result in an effective income tax rate of 5.25% on the repatriation of foreign earnings, a rate much lower than the normal statutory tax rate of 35%. The Company has determined that it will not repatriate earnings of foreign subsidiaries under the AJC Act.

The AJC Act also provides a new deduction for qualified domestic production activities. When fully phased-in, the deduction will be up to 9% of the lesser of qualified production activities income or taxable income. Because this provision is targeted toward manufacturing activities, the Company does not expect to recognize a material benefit in the current or future tax years.

This excerpt taken from the HD 10-K filed Apr 11, 2005.

Income Taxes

        The Company provides for federal, state and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal, state and foreign tax benefits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date.

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        The Company and its eligible subsidiaries file a consolidated U.S. federal income tax return. Non-U.S. subsidiaries and certain U.S. subsidiaries, which are consolidated for financial reporting purposes, are not eligible to be included in the Company's consolidated U.S. federal income tax return. Separate provisions for income taxes have been determined for these entities.

        The American Jobs Creation Act of 2004 ("AJC Act") provides a one-time 85 percent dividends-received deduction that would apply to qualified cash dividends received from controlled foreign corporations if the funds are reinvested in the U.S. The deduction can result in an effective income tax rate of 5.25 percent on the repatriation of foreign earnings, a rate much lower than the normal statutory income tax rate of 35 percent. At this time, the Company is evaluating whether some or all of its unrepatriated foreign earnings will be repatriated under this new law. Since the Company currently intends to reinvest the unremitted earnings of its non-U.S. subsidiaries and postpone their remittance indefinitely, no provision for U.S. income taxes for non-U.S. subsidiaries was recorded in the accompanying Consolidated Statements of Earnings.

        The AJC Act also provides a new deduction for qualified domestic production activities. When fully phased-in, the deduction will be up to nine percent of the lesser of qualified production activities income or taxable income. Pursuant to Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," the deduction will be accounted for as a special deduction, not as a tax-rate reduction, because the deduction is contingent on performing activities identified in the AJC Act. The Company is currently assessing the potential impact of the AJC Act on its Provision for Income Taxes.

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