Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Tax Expense (Benefit)

Table 22.1 presents the components of income tax expense (benefit).

Table 22.1: Income Tax Expense (Benefit)

	Year ended December 31,
(in millions)	2022		2021	2020
Current:
U.S. Federal	$	888	5,850	2,231
U.S. State and local	(45)		849	(310)
Non-U.S.	169		171	211
Total current	1,012		6,870	2,132
Deferred:
U.S. Federal	636		(1,446)	(2,440)
U.S. State and local	448		200	(789)
Non-U.S.	(9)		(46)	(60)
Total deferred	1,075		(1,292)	(3,289)
Total	$	2,087	5,578	(1,157)

Effective Income Tax Expense (Benefit) and Rate

Table 22.2 reconciles the statutory federal income tax rate to the effective income tax rate. Our effective tax rate is calculated by dividing income tax expense (benefit) by income

before income tax expense (benefit) less the net income from noncontrolling interests.

Table 22.2: Effective Income Tax Expense (Benefit) and Rate

	December 31,
	2022				2021				2020
(in millions)	Amount		Rate		Amount		Rate		Amount		Rate
Statutory federal income tax expense and rate	$	3,206	21.0	%	$	5,697	21.0	%	$	466	21.0	%
Change in tax rate resulting from:
State and local taxes on income, net of federal income tax benefit	556		3.7		1,046		3.9		65		2.8
Tax-exempt interest	(321)		(2.1)		(316)		(1.2)		(358)		(16.1)
Tax credits, net of amortization (1)	(1,264)		(8.3)		(1,001)		(3.7)		(626)		(28.2)
Nondeductible expenses (2)	560		3.7		368		1.4		199		9.0
Changes in prior year unrecognized tax benefits, inclusive of interest	(503)		(3.3)		(122)		(0.4)		(938)		(42.2)
Other	(147)		(1.0)		(94)		(0.4)		35		1.6
Effective income tax expense (benefit) and rate	$	2,087	13.7	%	$	5,578	20.6	%	$	(1,157)	(52.1)	%

(1)Includes LIHTC proportional amortization expense, net of tax of $1.2 billion at both 2022 and 2021, and $1.1 billion in 2020.

(2)Includes amounts related to nondeductible litigation and regulatory accruals in all years presented as well as a nondeductible goodwill impairment in 2021.

Net Deferred Taxes

The tax effects of our temporary differences that gave rise to significant portions of our deferred tax assets and liabilities are presented in Table 22.3.

Table 22.3: Net Deferred Taxes

(in millions)	Dec 31, 2022		Dec 31, 2021
Deferred tax assets
Net operating loss and tax credit carry forwards	$	5,513	382
Allowance for credit losses	3,393		3,415
Net unrealized losses on debt securities	3,193		—
Deferred compensation and employee benefits	2,799		3,124
Accrued expenses	1,843		1,300
Lease liabilities	1,132		1,142
Other	2,044		1,048
Total deferred tax assets	19,917		10,411
Deferred tax assets valuation allowance	(232)		(267)
Deferred tax liabilities
Mark to market, net	(11,081)		(3,631)
Leasing and fixed assets	(2,792)		(3,523)
Mortgage servicing rights	(2,153)		(2,414)
Basis difference in investments	(1,095)		(496)
Right-of-use assets	(935)		(948)
Intangible assets	(753)		(559)
Net unrealized gains from debt securities	—		(278)
Other	(1,006)		(1,082)
Total deferred tax liabilities	(19,815)		(12,931)
Net deferred tax liability (1)	$	(130)	(2,787)

(1)The net deferred tax liability is included in accrued expenses and other liabilities.

Deferred Tax Assets Related To Net Operating Loss and Tax Credit Carry Forwards

Table 22.4 presents the components of the deferred tax assets related to net operating loss (NOL) and tax credit carry forwards at December 31, 2022.

Table 22.4: Deferred Tax Assets Related To Net Operating Loss and Tax Credit Carry Forwards (1)

(in millions)	Dec 31, 2022
U.S. Federal NOLs	$	3,244
U.S. Federal tax credits	1,221
U.S. State NOLs and credits	974
Non-U.S. NOLs and credits	74
Total net operating loss and tax credit carryforwards	$	5,513

(1)U.S. Federal NOLs have no expiration date. The remaining balances, if not utilized, mostly expire in varying amounts through December 31, 2042.

Change in Unrecognized Tax Benefits

Table 22.5 presents the change in unrecognized tax benefits.

Table 22.5: Change in Unrecognized Tax Benefits

	Year ended   December 31,
(in millions)	2022		2021
Balance, beginning of period	$	5,218	4,826
Additions:
For tax positions related to the current year	695		441
For tax positions related to prior years	358		259
Reductions:
For tax positions related to prior years	(514)		(124)
Lapse of statute of limitations	(13)		(164)
Settlements with tax authorities	(307)		(20)
Balance, end of period	$	5,437	5,218

Tax Examination Status

Table 22.6 summarizes our major tax jurisdiction examination status as of December 31, 2022.

Table 22.6: Tax Examination Status

Jurisdiction	Tax Year(s)	Status
United States	2011-2014	Administrative appeals
United States	2015-2020	Field examination
California	2015-2016	Field examination
New York	2015-2019	Field examination