Company: KMX
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001170010-25-000024
Chunk: 122

Company: CARMAX INC
Filing Date: 2025-04-11
Form: 10-K
Item: Item 8
Chunk 122
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 29(In thousands)202520242023Balance at beginning of year$28,817 $27,092 $24,765 Increases for tax positions of prior years138 397 114 Decreases for tax positions of prior years— (172)(19)Increases based on tax positions related to the current year4,669 3,627 3,813 Settlements(142)(386)(79)Lapse of statute(15,447)(1,741)(1,502)Balance at end of year$18,035 $28,817 $27,092 As of February 28, 2025, we had $18.0 million of gross unrecognized tax benefits, $14.9 million of which, if recognized, would affect our effective tax rate.  As of February 29, 2024, we had $28.8 million of gross unrecognized tax benefits, $12.1 million of which, if recognized, would affect our effective tax rate.  The gross unrecognized tax benefit decrease was mainly driven by the statute expiration related to the payment of services provided by related entities.  As of February 28, 2023, we had $27.1 million of gross unrecognized tax benefits, $10.6 million of which, if recognized, would affect our effective tax rate.

69

Our continuing practice is to recognize interest and penalties related to income tax matters in SG&A expenses.  Our accrual for interest and penalties was $3.8 million, $5.3 million and $4.0 million as of February 28, 2025, February 29, 2024 and February 28, 2023, respectively.CarMax is subject to U.S. federal income tax as well as income tax of multiple states and local jurisdictions.  With a few insignificant exceptions, we are no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years prior to fiscal 2022.

11.  BENEFIT PLANS

(A)Retirement Benefit PlansWe have two frozen noncontributory defined benefit plans: our pension plan (the “pension plan”) and our unfunded, nonqualified plan (the “restoration plan”), which restores retirement benefits for certain associates who are affected by Internal Revenue Code limitations on benefits provided under the pension plan.  No additional benefits have accrued under these plans since they were frozen; however, we