Income Taxes

The following table is an analysis of the effective tax rate:



	Years Ended December 31,
(Dollars in millions)	2015		2014 ⁽¹⁾		2013 ⁽¹⁾
Federal income tax rate	35	%	35	%	35	%
Net tax effects of:
State income taxes, net of federal income tax benefit	5		6		5
Tax-exempt interest income	(2	)	(1	)	(1	)
Amortization of LIHC investments	12		6		9
Tax credits	(27	)	(14	)	(15	)
Other	(1	)	(1	)	(2	)
Effective tax rate	22	%	31	%	31	%


(1)	Prior period amounts have been revised to reflect the January 1, 2015 adoption of Accounting Standards Update 2014-01 related to investments in qualified affordable housing projects.

The components of income tax expense were as follows:



	Years Ended December 31,
(Dollars in millions)	2015			2014 ⁽¹⁾		2013 ⁽¹⁾
Taxes currently payable:
Federal	$	141		$	171	$	148
State	58			76		43
Foreign	13			13		12
Total currently payable	212			260		203
Taxes deferred:
Federal	(34		)	69		84
State	(18		)	27		(6		)
Foreign	(9		)	3		(2		)
Total deferred	(61		)	99		76
Total income tax expense	$	151		$	359	$	279


(1)	Prior period amounts have been revised to reflect the January 1, 2015 adoption of Accounting Standards Update 2014-01 related to investments in qualified affordable housing projects.

The components of the Company's net deferred tax balances as of December 31, 2015 and 2014 were as follows:



	December 31,
(Dollars in millions)	2015		2014 ⁽¹⁾
Deferred tax assets:
Allowance for credit losses	$	392	$	283
Accrued expense, net	274		272
Unrealized losses on pension and postretirement benefits	401		389
Unrealized net losses on securities available for sale	101		97
Fair value adjustments for valuation of FDIC covered assets	125		159
Other	82		63
Total deferred tax assets	1,375		1,263
Deferred tax liabilities:
Leasing	779		759
Intangible assets	98		99
Pension liabilities	427		389
Other	—		5
Total deferred tax liabilities	1,304		1,252
Net deferred tax asset	$	71	$	11


(1)	Prior period amounts have been revised to reflect the January 1, 2015 adoption of Accounting Standards Update 2014-01 related to investments in qualified affordable housing projects.

At December 31, 2015, we had net operating loss and tax credit carry forwards for which related deferred tax assets of $12 million and $69 million, respectively, were recorded. The net operating loss and tax credit carry forwards expire in varying amounts through 2034.

Deferred tax assets are evaluated for realization based on the existence of sufficient taxable income of the appropriate character. Management has determined that no valuation allowance is required.

The changes in unrecognized tax positions were as follows:



	Years Ended December 31,
(Dollars in millions)	2015			2014			2013
Balance, beginning of year	$	8		$	16		$	269
Gross increases as a result of tax positions taken during prior periods	1			—			1
Gross decreases as a result of tax positions taken during prior periods	(4		)	(10		)	(256		)
Gross increases as a result of tax positions taken during current period	2			2			2
Balance, end of year	$	7		$	8		$	16

The amount of unrecognized tax positions that would affect the effective tax rate, if recognized, was $7 million, $7 million and $12 million at December 31, 2015, 2014 and 2013, respectively.

The Company recognizes interest and penalties as a component of income tax expense. For 2014 and 2013, the Company reversed $3 million and $12 million of gross interest and penalties as a benefit to income tax expense, respectively. As of December 31, 2015 and 2014, there were no accruals recorded for gross interest and penalties. As of December 31, 2013, we accrued $3 million of gross interest and penalties.

The Company is subject to U.S. federal income tax as well as various state and foreign income taxes. With limited exception, the Company is not open to examination for periods before 2010 by U.S. federal and state taxing authorities.