Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

The components of income tax expense are as follows:

Table 91: Components of Income Tax Expense



Year ended December 31 In millions	2017			2016		2015
Current
Federal	$	454		$	871	$	927
State	51			71		33
Total current	505			942		960
Deferred
Federal	(474		)	301		320
State	71			25		84
Total deferred	(403		)	326		404
Total (a)	$	102		$	1,268	$	1,364

(a) The 2017 results benefited from the new federal tax legislation that was enacted on December 22, 2017.

Deferred Tax Assets and Liabilities

Significant components of deferred tax assets and liabilities are as follows:

Table 92: Deferred Tax Assets and Liabilities



December 31 – in millions	2017 (a)			2016
Deferred tax assets
Allowance for loan and lease losses	$	631		$	976
Compensation and benefits	223			548
Partnership investments	173			307
Loss and credit carryforward	301			460
Accrued expenses	284			505
Other	131			252
Total gross deferred tax assets	1,743			3,048
Valuation allowance	(40		)	(75		)
Total deferred tax assets	1,703			2,973
Deferred tax liabilities
Leasing	1,034			1,374
Goodwill and intangibles	197			312
Fixed assets	206			391
Mortgage servicing rights	146			246
Net unrealized gains on securities and financial instruments	155			284
BlackRock basis difference	1,594			2,361
Other	345			371
Total deferred tax liabilities	3,677			5,339
Net deferred tax liability	$	1,974		$	2,366

(a) Reflected the impact of new federal tax legislation that was enacted on December 22, 2017. Certain tax legislation amounts are considered reasonable estimates as of December 31, 2017.

Reconciliation of Statutory and Effective Tax Rates

A reconciliation between the statutory and effective tax rates follows:

Table 93: Reconciliation of Statutory and Effective Tax Rates



Year ended December 31	2017		2016		2015
Statutory tax rate	35.0	%	35.0	%	35.0	%
Increases (decreases) resulting from:
State taxes net of federal benefit	1.5		1.2		1.4
Tax-exempt interest	(2.5	)	(2.4	)	(2.3	)
Life insurance	(1.8	)	(1.9	)	(1.7	)
Dividend received deduction	(1.8	)	(1.8	)	(1.7	)
Tax credits	(4.2	)	(4.4	)	(3.9	)
Federal deferred tax revaluation	(21.7	)
Other	(2.6	)	(1.6	)	(2.0	)	(a)
Effective tax rate (b)	1.9	%	24.1	%	24.8	%


(a)	Includes tax benefits associated with settlement of acquired entity tax contingencies.


(b)	The effective tax rates are generally lower than the statutory rate due to the relationship of pretax income to tax credits and earnings that are not subject to tax. The 2017 results benefited from the new federal tax legislation. Certain tax legislation amounts are considered reasonable estimates as of December 31, 2017.

Net Operating Loss Carryforwards

The net operating loss carryforwards at December 31, 2017 and 2016 follow

Table 94: Net Operating Loss Carryforwards



Dollars in millions	December 31, 2017		December 31, 2016		Expiration
Net Operating Loss Carryforwards:
Federal	$	640	$	759	2032
State	$	1,776	$	2,345	2018 – 2036

Change in Unrecognized Tax Benefits

A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows:

Table 95: Change in Unrecognized Tax Benefits



In millions	2017			2016			2015
Balance of gross unrecognized tax benefits at January 1	$	22		$	26		$	77
Increases:
Positions taken during a prior period	4			14			17
Decreases:
Positions taken during a prior period	(3		)	(14		)	(9		)
Settlements with taxing authorities	(4		)				(52		)
Reductions resulting from lapse of statute of limitations	(1		)	(4		)	(7		)
Balance of gross unrecognized tax benefits at December 31	$	18		$	22		$	26
Favorable (unfavorable) impact if recognized	$	17		$	18		$	20

IRS Tax Examination Status

Table 96: IRS Tax Examination Status



	Years under examination	Status at December 31
Federal	2014 – 2015	Completed
	2016	Under Exam