Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Income Taxes

Note 9 Income Taxes

The components of income tax expense were:

	Three Months Ended June 30,					Six Months Ended   June 30,
(Dollars in Millions)	2012			2011		2012			2011
Federal
Current	$	551		$	51	$	955		$	457
Deferred		(92	)		317		(24	)		273
Federal income tax		459			368		931			730
State
Current		112			62		162			72
Deferred		(7	)		28		(2	)		22
State income tax		105			90		160			94
Total income tax provision	$	564		$	458	$	1,091		$	824

A reconciliation of expected income tax expense at the federal statutory rate of 35 percent to the Company’s applicable income tax expense follows:

	Three Months Ended June 30,						Six Months Ended   June 30,
(Dollars in Millions)	2012			2011			2012			2011
Tax at statutory rate	$	680		$	573		$	1,321		$	1,061
State income tax, at statutory rates, net of federal tax benefit		68			58			104			61
Tax effect of
Tax credits, net of related expenses		(113	)		(108	)		(202	)		(195	)
Tax-exempt income		(55	)		(57	)		(110	)		(113	)
Noncontrolling interests		13			8			24			14
Other items		(29	)		(16	)		(46	)		(4	)
Applicable income taxes	$	564		$	458		$	1,091		$	824

The Company’s income tax returns are subject to review and examination by federal, state, local and foreign government authorities. On an ongoing basis, numerous federal, state, local and foreign examinations are in progress and cover multiple tax years. As of June 30, 2012, the federal taxing authority has completed its examination of the Company through the fiscal year ended December 31, 2008. The years open to examination by foreign, state and local government authorities vary by jurisdiction.

The Company’s net deferred tax liability was $1.4 billion at June 30, 2012, and $1.1 billion at December 31, 2011.