Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Applicable Income Taxes Included in the Consolidated Statements Of Income

The Bancorp and its subsidiaries file a consolidated federal income tax return. The following is a summary of applicable income taxes included in the Consolidated Statements of Income for the years ended December 31:

($ in millions)		2018	2017	2016
Current income tax expense (benefit):
U.S. Federal income taxes	$	463	986	751
State and local income taxes		71	68	55
Foreign income taxes		8	(3)	-
Total current income tax expense		542	1,051	806
Deferred income tax expense (benefit):
U.S. Federal income taxes		24	(254)	(126)
State and local income taxes		4	2	(14)
Foreign income taxes		2	-	(1)
Total deferred income tax expense (benefit)		30	(252)	(141)
Applicable income tax expense	$	572	799	665

Reconciliation Between the Statutory U.S. Income Tax Rate and the Bancorp's Effective Tax Rate

The following is a reconciliation between the statutory U.S. Federal income tax rate and the Bancorp’s effective tax rate for the years ended December 31:

	2018		2017	2016
Statutory tax rate	21.0	%	35.0	35.0
Increase (decrease) resulting from:
State taxes, net of federal benefit	2.1		1.5	1.2
Tax-exempt income	(0.8)		(1.1)	(2.5)
LIHTC investment and other tax benefits	(6.8)		(6.9)	(9.4)
LIHTC investment proportional amortization	5.6		7.4	6.9
Other tax credits	(0.1)		(0.4)	(0.8)
U.S. tax legislation impact on deferred taxes	-		(8.5)	-
Other, net	(0.3)		(0.2)	(0.3)
Effective tax rate	20.7	%	26.8	30.1

Reconciliation of the Beginning and Ending Amounts of the Bancorp's Unrecognized Tax Benefits

The following table provides a reconciliation of the beginning and ending amounts of the Bancorp’s unrecognized tax benefits:

($ in millions)		2018	2017	2016
Unrecognized tax benefits at January 1	$	34	24	13
Gross increases for tax positions taken during prior period		20	17	9
Gross decreases for tax positions taken during prior period		(1)	(1)	-
Gross increases for tax positions taken during current period		8	3	2
Settlements with taxing authorities		(5)	(7)	-
Lapse of applicable statute of limitations		(1)	(2)	-
Unrecognized tax benefits at December 31^(a)	$	55	34	24

(a) With the exception of $5 in 2018, all amounts represent unrecognized tax benefits that, if recognized, would affect the annual effective tax rate.

Deferred Income Taxes Included in Other Assets in the Consolidated Balance Sheets

Deferred income taxes are comprised of the following items at December 31:

($ in millions)		2018	2017
Deferred tax assets:
Allowance for loan and lease losses	$	232	251
Deferred compensation		79	77
Other comprehensive income		42	-
Reserve for unfunded commitments		28	34
Reserves		28	29
State net operating loss carryforwards		7	9
Other		112	103
Total deferred tax assets	$	528	503
Deferred tax liabilities:
Lease financing	$	599	616
Investments in joint ventures and partnership interests		131	85
MSRs and related economic hedges		107	111
State deferred taxes		73	68
Bank premises and equipment		60	42
Other comprehensive income		-	21
Other		102	137
Total deferred tax liabilities	$	1,072	1,080
Total net deferred tax liability	$	(544)	(577)