Entity information:
4.
Income Taxes
 
The provision for income tax expense or (benefit) for fiscal years 2017, 2016 and 2015 is as follows:
 
 
 
Fiscal Years Ended
 
 
 
February 3,
 
January 28,
 
January 30,
 
 
 
2018
 
2017
 
2016
 
 
 
(in thousands)
 
Current:
 
 
 
 
 
 
 
 
 
 
Federal
 
$
6,882
 
$
27,306
 
$
23,472
 
State
 
 
1,314
 
 
3,712
 
 
3,311
 
Total
 
 
8,196
 
 
31,018
 
 
26,783
 
Deferred:
 
 
 
 
 
 
 
 
 
 
Federal
 
 
6,373
 
 
(4,526)
 
 
(2,684)
 
State
 
 
(274)
 
 
(885)
 
 
(542)
 
Total
 
 
6,099
 
 
(5,411)
 
 
(3,226)
 
Income tax expense
 
$
14,295
 
$
25,607
 
$
23,557
 
 
The reconciliation of the statutory federal income tax rate to the effective tax rate follows:
 
 
 
Fiscal Years Ended
 
 
 
February 3,
 
January 28,
 
January 30,
 
 
 
2018
 
2017
 
2016
 
Income tax expense at statutory rate
 
 
33.4
%
 
35.0
%
 
35.0
%
Deferred tax remeasurement under the Tax Cuts and Jobs Act (“Tax Act”)
 
 
11.0
 
 
-
 
 
-
 
State tax, net of federal benefit
 
 
1.9
 
 
2.8
 
 
3.1
 
Nondeductible expenses
 
 
0.9
 
 
0.2
 
 
0.1
 
Other
 
 
0.7
 
 
(0.1)
 
 
0.0
 
Effective tax rate
 
 
47.9
%
 
37.9
%
 
38.2
%
 
On December 22, 2017, the Tax  Act was enacted into law effective on January 1, 2018. The Tax Act made broad and complex changes to the Internal Revenue Code of 1986, including, but not limited to: (a) a reduction in the federal corporate income tax rate from 35% to 21%; (b) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits are realized; (c) creating a new limitation on deductible interest expense; and (d) changing rules related to uses and limitation of net operating loss carryforwards created in tax years beginning after December 31, 2017. In accordance with ASC 740, Income Taxes, the Company is required to record the effects of tax law changes in the period enacted. As the tax rate was effective on a date other than the Company’s fiscal year-end, the Company is required to use a blended U.S. statutory tax rate for fiscal year 2017 of 33.4%. Additionally, the Tax Act required the remeasurement of the Company’s net deferred tax asset using the lower federal corporate income tax rate. Accordingly, the Company recorded $3.3 million of one-time, non-cash tax expense related to the tax rate change and is included as a component of income tax expense for the fiscal year.
 
The income tax expense reported in the Company’s consolidated statement of operations for fiscal year 2017 was based on the Company’s initial evaluation of the impact of the Tax Act and is still subject to change as allowed by SEC Staff Accounting Bulletin (“SAB”) No. 118, “Income Tax Accounting Implication of the Tax Cuts and Jobs Act.” The Company will continue to refine and update its analysis and any subsequent adjustments to its estimates will be reflected in income tax expense or benefit in one or more future periods in fiscal year 2018.
 
Deferred tax assets and liabilities are recorded due to different carrying amounts for financial and income tax reporting purposes arising from cumulative temporary differences as measured by enacted tax rates, which will be in effect when these temporary differences reverse. These differences consist of the following as of the dates indicated:
  
 
 
As of Fiscal Year Ended
 
 
 
February 3,
 
January 28,
 
 
 
2018
 
2017
 
 
 
(in thousands)
 
Deferred tax assets:
 
 
 
 
 
 
 
Landlord incentives and deferred rents
 
$
8,969
 
$
13,978
 
Accrued liabilities
 
 
2,708
 
 
4,362
 
Inventories
 
 
2,380
 
 
4,125
 
Stock-based compensation
 
 
1,477
 
 
2,061
 
State net operating losses
 
 
672
 
 
-
 
Other
 
 
34
 
 
49
 
 
 
 
16,240
 
 
24,575
 
Deferred tax liabilities:
 
 
 
 
 
 
 
Property and equipment
 
 
(6,827)
 
 
(9,110)
 
 
 
 
(6,827)
 
 
(9,110)
 
 
 
 
 
 
 
 
 
Net deferred tax assets
 
$
9,413
 
$
15,465
 
 
The Company’s tax years are subject to examination by federal authorities from 2014 forward and by state taxing authorities from 2013 forward.