Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Components of income tax expense

The components of income tax expense for the years ended December 31 included in the Consolidated Statements of Income were as follows:

(Millions)	2019		2018		2017
Current income tax expense:
U.S. federal	$	1,108	$	70	$	3,408
U.S. state and local	276		150		259
Non-U.S.	437		681		387
Total current income tax expense	1,821		901		4,054
Deferred income tax (benefit) expense:
U.S. federal	(58)		276		544
U.S. state and local	(31)		78		(12)
Non-U.S.	(62)		(54)		91
Total deferred income tax (benefit) expense	(151)		300		623
Total income tax expense	$	1,670	$	1,201	$	4,677

Effective income tax rate

A reconciliation of the U.S. federal statutory rate of 21 percent as of both December 31, 2019 and 2018, and 35 percent as of December 31, 2017, to our actual income tax rate was as follows:

	2019		2018		2017
U.S. statutory federal income tax rate	21.0	%	21.0	%	35.0	%
(Decrease) increase in taxes resulting from:
Tax-exempt income	(1.9)		(1.7)		(1.7)
State and local income taxes, net of federal benefit	2.8		2.8		2.3
Non-U.S. subsidiaries' earnings(a)	(0.7)		(0.5)		(5.7)
Tax settlements(b)	(0.3)		(1.9)		(0.7)
U.S. Tax Act(c)	—		(1.1)		34.8
U.S. Tax Act - related adjustments(d)	—		(3.2)		—
Other	(1.1)		(0.6)		(1.0)
Actual tax rates	19.8	%	14.8	%	63.0	%

(a)2017 primarily included tax benefits associated with the undistributed earnings of certain non-U.S. subsidiaries that were previously deemed to be reinvested indefinitely. In addition, 2017 included tax benefits of $156 million, which decreased the actual tax rate by 2.1 percent, related to the realization of certain foreign tax credits.

(b)2018 primarily included a settlement of the IRS examination for tax years 2008-2014, as well as the resolution of certain tax matters in various jurisdictions.

(c)2017 included a $2.6 billion provisional charge for the impacts of the Tax Act and the adjustments thereto are included in 2018.

(d)Related to changes to the tax method of accounting for certain expenses.

Components of deferred tax assets and liabilities

The significant components of deferred tax assets and liabilities as of December 31 are reflected in the following table:

(Millions)	2019		2018
Deferred tax assets:
Reserves not yet deducted for tax purposes	$	2,633	$	2,612
Employee compensation and benefits	365		360
Other	536		431
Gross deferred tax assets	3,534		3,403
Valuation allowance	(66)		(61)
Deferred tax assets after valuation allowance	3,468		3,342
Deferred tax liabilities:
Intangibles and fixed assets	1,279		1,083
Deferred revenue	315		435
Deferred interest	162		171
Investment in joint ventures	122		137
Other	129		210
Gross deferred tax liabilities	2,007		2,036
Net deferred tax assets	$	1,461	$	1,306

Changes in unrecognized tax benefits

The following table presents changes in unrecognized tax benefits:

(Millions)	2019		2018		2017
Balance, January 1	$	701	$	821	$	974
Increases:
Current year tax positions	66		152		200
Tax positions related to prior years	78		47		39
Effects of foreign currency translations	10		—		—
Decreases:
Tax positions related to prior years(a)	(14)		(74)		(289)
Settlements with tax authorities(b)	(40)		(192)		(77)
Lapse of statute of limitations	(75)		(44)		(26)
Effects of foreign currency translations	—		(9)		—
Balance, December 31	$	726	$	701	$	821

(a)Decrease in 2017 due to the resolution with the IRS of an uncertain tax position in January 2017, which resulted in the recognition of $289 million in AOCI.

(b) 2018 included a settlement of the IRS examination for tax years 2008-2014 and the resolution of certain tax matters in various jurisdictions.