Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Taxes

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)	2019		2018		2017
Current income tax expense (benefit):
U.S. Federal income taxes	$	788		463		986
State and local income taxes		148		71		68
Foreign income taxes		-		8		(3)
Total current income tax expense		936		542		1,051
Deferred income tax (benefit) expense:
U.S. Federal income taxes		(212)		24		(254)
State and local income taxes		(35)		4		2
Foreign income taxes		1		2		-
Total deferred income tax (benefit) expense		(246)		30		(252)
Applicable income tax expense	$	690		572		799

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

The following is a reconciliation between the federal statutory corporate tax rate and the Bancorp’s effective tax rate for the years ended December 31:

	2019			2018			2017
Statutory tax rate		21.0	%		21.0			35.0
Increase (decrease) resulting from:
State taxes, net of federal benefit		2.8			2.1			1.5
Tax-exempt income		(1.2	)		(0.8	)		(1.1	)
LIHTC investment and other tax benefits		(5.0	)		(6.8	)		(6.9	)
LIHTC investment proportional amortization		4.4			5.6			7.4
Other tax credits		(0.2	)		(0.1	)		(0.4	)
U.S. tax legislation impact on deferred taxes		-			-			(8.5	)
Other, net		(0.2	)		(0.3	)		(0.2	)
Effective tax rate		21.6	%		20.7			26.8

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)	2019		2018		2017
Unrecognized tax benefits at January 1	$	55		34		24
Gross increases for tax positions taken during prior period		25		20		17
Gross decreases for tax positions taken during prior period		(3)		(1)		(1)
Gross increases for tax positions taken during current period		6		8		3
Settlements with taxing authorities		(9)		(5)		(7)
Lapse of applicable statute of limitations		(9)		(1)		(2)
Unrecognized tax benefits at December 31(a)	$	65		55		34

(a) With the exception of $6 and $5 in 2019 and 2018, respectively, 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)	2019		2018
Deferred tax assets:
Allowance for loan and lease losses	$	252		232
Deferred compensation		103		79
Other comprehensive income		-		42
Reserve for unfunded commitments		30		28
Reserves		32		28
State net operating loss carryforwards		9		7
Other		154		112
Total deferred tax assets	$	580		528
Deferred tax liabilities:
Lease financing	$	650		599
Investments in joint ventures and partnership interests		25		131
MSRs and related economic hedges		144		107
State deferred taxes		47		73
Bank premises and equipment		73		60
Other comprehensive income		352		-
Other		127		102
Total deferred tax liabilities	$	1,418		1,072
Total net deferred tax liability	$	(838)		(544)