Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Taxes (Tables) [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)				2012		2011		2010
Current income tax expense:
	U.S. federal		$	982	$	958	$	532
	U.S. state and local			189		156		110
	Non-U.S.			445		434		508
		Total current income tax expense		1,616		1,548		1,150
Deferred income tax expense (benefit):
	U.S. federal			359		464		782
	U.S. state and local			39		68		78
	Non-U.S.			(45)		(23)		(103)
		Total deferred income tax expense		353		509		757
Total income tax expense on
	continuing operations		$	1,969	$	2,057	$	1,907
Income tax benefit from
	discontinued operations		$	―	$	(36)	$	―

Effective income tax rate

A reconciliation of the U.S. federal statutory rate of 35 percent to the Company's actual income tax rate for the years ended December 31 on continuing operations was as follows:

			2012		2011		2010
U.S. statutory federal income tax rate			35.0	%	35.0	%	35.0	%
Increase (decrease) in taxes resulting from:
	Tax-exempt income		(1.6)		(1.5)		(1.9)
	State and local income taxes, net of
		federal benefit	2.5		2.6		2.7
	Non-U.S. subsidiaries earnings(a)		(5.2)		(4.4)		(3.1)
	Tax settlements(b)		(0.2)		(1.9)		(1.3)
	All other		―		(0.2)		0.6
		Actual tax rates(a)	30.5	%	29.6	%	32.0	%

• Results for all years primarily included tax benefits associated with the undistributed earnings of certain non-U.S. subsidiaries that were deemed to be reinvested indefinitely.In addition, 2012 and 2011 includedtax benefits of $146 million and $77 million, which decreased the actual tax rates by 2.3percent and 1.1 percent, respectively, related to the realization of certain foreign tax credits.
• Relates to the resolution of tax matters in various jurisdictions.

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)				2012		2011
Deferred tax assets:
	Reserves not yet deducted for tax purposes		$	3,828	$	3,435
	Employee compensation and benefits			761		760
	Other			556		626
		Gross deferred tax assets		5,145		4,821
		Valuation allowance		(162)		(112)
		Deferred tax assets after valuation allowance		4,983		4,709
Deferred tax liabilities:
	Intangibles and fixed assets			1,218		1,013
	Deferred revenue			403		382
	Deferred interest			378		―
	Other			526		439
		Gross deferred tax liabilities		2,525		1,834
Net deferred tax assets			$	2,458	$	2,875

Changes in unrecognized tax benefits

The following table presents changes in unrecognized tax benefits:

(Millions)				2012		2011		2010
Balance, January 1			$	1,223	$	1,377	$	1,081
Increases:
	Current year tax positions			51		77		182
	Tax positions related to prior years			64		247		403
Decreases:
	Tax positions related to prior years			(44)		(457)		(145)
	Settlements with tax authorities			(25)		(2)		(138)
	Lapse of statute of limitations			(37)		(19)		(6)
	Effects of foreign currency
		translations		(2)		―		―
Balance, December 31			$	1,230	$	1,223	$	1,377