Income Taxes

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Income Taxes

 Note 11    Income Taxes

The components of income tax expense were:

	Three Months Ended September 30						Nine Months Ended September 30
(Dollars in Millions)	2020			2019			2020			2019
Federal
Current	$	(53	)	$	414		$	966		$	1,002
Deferred		306			(59	)		(459	)		26
Federal income tax		253			355			507			1,028
State
Current		92			140			298			280
Deferred		2			(28	)		(134	)		(14	)
State income tax		94			112			164			266
Total income tax provision	$	347		$	467		$	671		$	1,294

A reconciliation of expected income tax expense at the federal statutory rate of 21 percent to the Company’s applicable income tax expense follows:

	Three Months Ended September 30						Nine Months Ended September 30
(Dollars in Millions)	2020			2019			2020			2019
Tax at statutory rate	$	406		$	501		$	867		$	1,417
State income tax, at statutory rates, net of federal tax benefit		75			99			170			277
Tax effect of
Tax credits and benefits, net of related expenses		(82	)		(97	)		(280	)		(307	)
Exam resolutions		(47	)		–			(47	)		(49	)
Tax-exempt income		(29	)		(29	)		(87	)		(92	)
Other items		24			(7	)		48			48
Applicable income taxes	$	347		$	467		$	671		$	1,294

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 September 30, 2020, federal tax examinations for all years ending through December 31, 2014 are completed and resolved. The Company’s tax returns for the years ended December 31, 2015, 2016, 2017 and 2018 are under examination by the Internal Revenue Service. The years open to examination by foreign, state and local government authorities vary by jurisdiction.

The Company’s net deferred tax asset was $657 million at September 30, 2020 and $382 million at December 31, 2019.