Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

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

Total income taxes were as follows:



Year Ended December 31,	2014			2013			2012
	(in millions)
Provision (benefit) for income taxes related to continuing operations	$	224		$	325		$	(1,406	)
Income taxes related to adjustments included in common shareholder’s equity:
Unrealized gains (losses) on securities available-for-sale, not other-than-temporarily impaired, net	—			(62		)	7
Unrealized gains (losses) on other-than-temporarily impaired debt securities available-for-sale	—			(1		)	1
Unrealized gains on cash flow hedging instruments	24			143			75
Changes in funded status of postretirement benefit plans	(2		)	8			(8		)
Foreign currency translation adjustments	—			(10		)	1
Total	$	246		$	403		$	(1,330	)

Provision (benefit) for income taxes related to our continuing operations all of which were in the United States were:



Year Ended December 31,	2014		2013			2012
	(in millions)
Current provision (benefit)	$	108	$	(917	)	$	(958	)
Deferred provision (benefit)	116		1,242			(448		)
Total income provision (benefit)	$	224	$	325		$	(1,406	)

The significant components of deferred provision (benefit) attributable to income from continuing operations were:



Year Ended December 31,	2014			2013			2012
	(in millions)
Deferred income tax provision (benefit) excluding the effects of other components	$	473		$	1,443		$	(597	)
Increase in Federal operating loss carryforwards	(366		)	(141		)	—
(Decrease) increase in State valuation allowances	(53		)	(51		)	323
Decrease (increase) in State operating loss carryforwards and other temporary differences	42			11			(296		)
(Increase) decrease in foreign and general business tax credits	20			(20		)	122
Deferred income tax provision (benefit)	$	116		$	1,242		$	(448	)

Summary of Effective Tax Rates

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



Year Ended December 31,	2014					2013					2012
	(dollars are in millions)
Tax provision (benefit) at the U.S. federal statutory income tax rate	$	270		35.0	%	$	363		35.0	%	$	(1,334	)	(35.0	)%
Increase (decrease) in rate resulting from:
State and local taxes, net of Federal benefit	12			1.6		9			.9		(19		)	(.5	)
Adjustment with respect to tax for prior periods⁽¹⁾	38			4.9		11			1.1		(51		)	(1.3	)
Adjustment of tax rate used to value deferred taxes⁽²⁾	(52		)	(6.7	)	(5		)	(.5	)	(7		)	(.2	)
Change in valuation allowance⁽³⁾	(28		)	(3.6	)	(11		)	(1.1	)	15			.4
Uncertain tax positions⁽⁴⁾	(2		)	(.3	)	(10		)	(1.0	)	(15		)	(.4	)
Other non-deductible/non-taxable items⁽⁵⁾	(11		)	(1.4	)	(29		)	(2.8	)	—			—
Other	(3		)	(.4	)	(3		)	(.3	)	5			.1
Total income tax expense (benefit)	$	224		29.1	%	$	325		31.3	%	$	(1,406	)	(36.9	)%

⁽¹⁾

For 2014, the amount relates to changes in estimates as a result of filing the Federal and State income tax returns and a change in state tax expense as a result of filing amended State tax returns upon the closing of the Federal audits for the 2006 - 2009 tax years. For 2013 and 2012, the amounts relate to corrections to current and deferred tax balance sheet accounts and changes in estimates as a result of filing the Federal and State income tax returns.


⁽²⁾	For 2014, the amount primarily relates to the effects of revaluing our deferred tax assets as a result of New York State Tax Reform that was enacted on March 31, 2014.

⁽³⁾

For 2014, the amount relates to changes in valuation allowance reserves in States with net operating loss carryforward periods of 12 to 20 years and a release of valuation allowance reserves as a result of filing amended State tax returns upon the closing of the Federal audits for the 2006-2009 tax years. For 2013 and 2012, the amounts relate to changes in valuation allowance in states with net operating loss carryforward periods of 12 to 20 years.


⁽⁴⁾	For 2014, 2013 and 2012, the amounts primarily relate to the conclusion of State audits and expiration of State statutes of limitations.


⁽⁵⁾	For 2014, the amount primarily relates to tax exempt income and nondeductible penalties. For 2013, the amount includes a change in the estimated deductibility of accrued costs for certain regulatory matters that were accrued during 2011.

Schedule of Deferred Tax Assets and Liabilities

The components of the net deferred tax asset are presented in the following table:



	December 31, 2014			December 31, 2013
	(in millions)
Deferred Tax Assets:
Credit loss reserves	$	881		$	1,220
Federal and state unused tax benefit carryforwards	1,335			1,080
Market value adjustment related to derivatives and long-term debt carried at fair value	449			392
Interests in Real Estate Mortgage Investment Conduits ⁽¹⁾	326			394
Accrued expenses not currently deductible	191			199
Other	280			372
Total deferred tax assets	3,462			3,657
Valuation allowance	(878		)	(931		)
Total deferred tax assets net of valuation allowance	2,584			2,726
Deferred Tax Liabilities:
Fee income	74			82
Other	66			64
Total deferred tax liabilities	140			146
Net deferred tax asset	$	2,444		$	2,580

⁽¹⁾

Real Estate Mortgage Investment Conduits ("REMIC") are investment vehicles that hold commercial and residential mortgages in trust and issue securities representing an undivided interest in these mortgages. We hold portfolios of noneconomic residual interests in a number of REMICs through one of our subsidiaries. This item represents the tax basis in such interests which has accumulated as a result of tax rules requiring the recognition of income related to such noneconomic residuals.

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:



	December 31, 2014		December 31, 2013
	(in millions)
State unused tax benefit carryforwards	$	822	$	875
Deferred capital loss on sale to affiliates	56		56
Total	$	878	$	931

Schedule of Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amount of unrecognized tax benefits related to uncertain tax positions is as follows:



	2014			2013			2012
	(in millions)
Balance at beginning of year	$	111		$	165		$	153
Additions based on tax positions related to the current year	—			—			8
Additions for tax positions of prior years	3			3			49
Reductions for tax positions of prior years	(3		)	(41		)	(27		)
Settlements	(18		)	(8		)	(18		)
Reductions for lapse of statute of limitations	—			(8		)	—
Balance at end of year	$	93		$	111		$	165