Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

Total income taxes were as follows:



Year Ended December 31,	2012			2011			2010
	(in millions)
Benefit for income taxes related to continuing operations	$	(1,406	)	$	(1,431	)	$	(1,453	)
Income taxes related to adjustments included in common shareholder’s equity:
Unrealized gains on securities available-for-sale, not other-than-temporarily impaired, net	7			13			26
Unrealized gains (losses) on other-than-temporarily impaired debt securities available-for-sale	1			3			(3		)
Unrealized gains on cash flow hedging instruments	75			52			43
Changes in funded status of postretirement benefit plans	(8		)	(6		)	(5		)
Foreign currency translation adjustments	1			(1		)	2
Total	$	(1,330	)	$	(1,370	)	$	(1,390	)

Provisions for income taxes related to our continuing operations all of which were in the United States were:



Year Ended December 31,	2012			2011			2010
	(in millions)
Current provision (benefit)	$	(958	)	$	(772	)	$	(1,684	)
Deferred provision (benefit)	(448		)	(659		)	231
Total income benefit	$	(1,406	)	$	(1,431	)	$	(1,453	)

The significant components of deferred provisions attributable to income from continuing operations were:



Year Ended December 31,	2012			2011			2010
	(in millions)
Deferred income tax (benefit) provision (excluding the effects of other components)	$	(597	)	$	(602	)	$	148
(Decrease) increase in valuation allowance	323			(65		)	49
(Increase) decrease in State operating loss carryforwards and credits	(296		)	(65		)	(8		)
Foreign and general business tax credits	122			73			42
Deferred income tax (benefit) provision	$	(448	)	$	(659	)	$	231

Summary of Effective Tax Rates

A reconciliation of income tax expense (benefit) compared with the amounts at the U.S. federal statutory rates was as follows:



Year Ended December 31,	2012					2011					2010
	(dollars are in millions)
Tax benefit at the U.S. federal statutory income tax rate	$	(1,334	)	(35.0	)%	$	(1,315	)	(35.0	)%	$	(1,401	)	(35.0	)%
Increase (decrease) in rate resulting from:
State and local taxes, net of Federal benefit	(21		)	(.6	)	2			.1		3			.1
Validation of tax accounts ⁽¹⁾	(16		)	(.4	)	16			.4		(20		)	(.5	)
Change in tax rate used to value deferred taxes	(7		)	(.2	)	—			—		—			—
Change in valuation allowance reserves⁽²⁾	27			.7		(133		)	(3.5	)	(8		)	(.2	)
Change in uncertain tax position reserves⁽³⁾	(15		)	(.4	)	(14		)	(.4	)	(22		)	(.6	)
Other ⁽⁴⁾	(40		)	(1.0	)	13			.3		(5		)	(.1	)
Total income tax benefit	$	(1,406	)	(36.9	)%	$	(1,431	)	(38.1	)%	$	(1,453	)	(36.3	)%


⁽¹⁾	For 2012, the amount relates to corrections to the current tax liability account and to deferred tax prior period adjustments. For 2011 and 2010, the amounts relate to deferred tax prior period adjustments.


⁽²⁾	For 2012, the amount relates to increase in valuation allowance on states with net operating loss carryforward periods of 15 to 20 years. For 2011, the amount relates mainly to the release of a valuation allowance previously established on foreign tax credits.


⁽³⁾	For 2012, 2011 and 2010, the amounts primarily relate to the conclusion of state audits and expiration of state statutes of limitations.

⁽⁴⁾

For 2012, the amount primarily relates to a reclassification of deferred tax accounts between continuing operations and discontinued operations with no consolidated impact. For 2011, the amounts primarily relate to the non-deductible portion of an accrual related to mortgage servicing matters. For 2010, the amounts relates to the amortization of purchase accounting adjustments on leveraged leases.

Schedule of Deferred Tax Assets and Liabilities

Temporary differences which gave rise to a significant portion of deferred tax assets and liabilities were as follows:



At December 31,	2012			2011
	(in millions)
Deferred Tax Assets:
Credit loss reserves	$	1,678		$	2,204
Receivables held for sale	921			—
Unused tax benefit carryforwards	930			762
Market value adjustment related to derivatives and long-term debt carried at fair value	624			446
Real Estate Mortgage Investment Conduit (“REMIC”)	505			226
Other	463			577
Total deferred tax assets	5,121			4,215
Valuation allowance	(982		)	(662		)
Total deferred tax assets net of valuation allowance	4,139			3,553
Deferred Tax Liabilities:
Fee income	105			128
Other	145			111
Total deferred tax liabilities	250			239
Net deferred tax asset	$	3,889		$	3,314

Summary of Valuation Allowance

The deferred tax valuation allowance is attributed to the following deferred tax assets that based on the available evidence it is more-likely-than-not that the deferred tax asset will not be realized:



At December 31,	2012		2011
	(in millions)
State tax benefit loss limitations	$	926	$	606
Deferred capital loss on sale to affiliates	49		49
Other	7		7
Total	$	982	$	662

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



	2012			2011
	(in millions)
Balance at beginning of year	$	153		$	164
Additions based on tax positions related to the current year	8			4
Additions for tax positions of prior years	49			60
Reductions for tax positions of prior years	(27		)	(19		)
Settlements	(18		)	(42		)
Reductions for lapse of statute of limitations	—			(14		)
Balance at end of year	$	165		$	153

- Definition

Tabular disclosure of valuation allowances to reduce deferred tax assets to net realizable value, including identification of the deferred tax asset more likely than not will not be fully realized and the corresponding amount of the valuation allowance.

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