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Income Taxes
 12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
NOTE 14 - INCOME TAXES
The components of the provision for income taxes included in the Consolidated Statements of Income for the years ended December 31 are presented in the following table:
(Dollars in millions)
2016
 
2015
 
2014
Current income tax provision:
 
 
 
 
 
Federal

$667

 

$707

 

$365

State
27

 
36

 
29

Total
694

 
743

 
394

Deferred income tax provision/(benefit):
 
 
 
 
 
Federal
59

 
27

 
99

State
52

 
(6
)
 
—

Total
111

 
21

 
99

Total provision for income taxes

$805

 

$764

 

$493



The provision for income taxes does not reflect the tax effects of unrealized gains and losses and other income and expenses recorded in AOCI. For additional information on AOCI, see Note 21, “Accumulated Other Comprehensive (Loss)/Income.”
A reconciliation of the provision for income taxes, using the statutory federal income tax rate of 35%, to the Company’s actual provision for income taxes and the effective tax rate during the years ended December 31 are presented in the following table:
 
2016
 
2015
 
2014
(Dollars in millions)
Amount
 
% of
Pre-Tax Income
 
Amount
 
% of
Pre-Tax Income
 
Amount
 
% of
Pre-Tax Income
Income tax provision at federal statutory rate

$939

 
35.0
 %
 

$944

 
35.0
 %
 

$793

 
35.0
 %
Increase/(decrease) resulting from:
 
 
 
 
 
 
 
 
 
 
 
State income taxes, net
53

 
2.0

 
25

 
0.9

 
12

 
0.5

Tax-exempt interest
(86
)
 
(3.2
)
 
(88
)
 
(3.3
)
 
(89
)
 
(3.9
)
Changes in UTBs (including interest), net
6

 
0.2

 
(31
)
 
(1.1
)
 
(82
)
 
(3.6
)
Income tax credits, net of amortization 1
(86
)
 
(3.2
)
 
(69
)
 
(2.6
)
 
(65
)
 
(2.9
)
Non-deductible expenses
8

 
0.3

 
—

 
—

 
(57
)
 
(2.5
)
Other
(29
)
2 
(1.1
)
2 
(17
)
 
(0.6
)
 
(19
)
 
(0.8
)
Total provision for income taxes and effective tax rate

$805

 
30.0
 %
 

$764

 
28.3
 %
 

$493

 
21.8
 %
1 Excludes income tax benefits of $2 million, $6 million, and $21 million for the years ended December 31, 2016, 2015, and 2014, respectively, related to tax credits, which were recognized as a reduction to the related investment asset.
2 Includes income tax benefits of $15 million related to the Company's early adoption of ASU 2016-09. See Note 1, "Significant Accounting Policies," for additional information.


Deferred income tax assets and liabilities result from differences between the timing of the recognition of assets and liabilities for financial reporting purposes and for income tax purposes. These assets and liabilities are measured using the enacted federal and state tax rates expected to apply in the periods in which the deferred tax assets or liabilities are expected to be realized. The net deferred income tax liability is recorded in other liabilities in the Consolidated Balance Sheets.


The significant DTAs and DTLs at December 31, net of the federal impact for state taxes, are presented in the following table:
(Dollars in millions)
2016
 
2015
DTAs:
 
 
 
ALLL

$639

 

$651

Accrued expenses
275

 
297

State NOLs and other carryforwards
170

 
192

Net unrealized losses in AOCI
472

 
257

Other
70

 
97

Total gross DTAs
1,626

 
1,494

Valuation allowance
(80
)
 
(79
)
Total DTAs
1,546

 
1,415

DTLs:
 
 
 
Leasing
659

 
707

Compensation and employee benefits
179

 
140

MSRs
370

 
372

Loans
142

 
109

Goodwill and intangible assets
233

 
216

Fixed assets
113

 
131

Other
82

 
65

Total DTLs
1,778

 
1,740

Net DTL

($232
)
 

($325
)

The DTAs include state NOLs and other state carryforwards that will expire, if not utilized, in varying amounts from 2017 to 2036. At December 31, 2016 and 2015, the Company had a valuation allowance recorded against its state carryforwards and certain state DTAs of $80 million and $79 million, respectively. A valuation allowance is not required for the federal and the remaining state DTAs because the Company believes it is more-likely-than-not that these assets will be realized.
The following table provides a rollforward of the Company's gross federal and state UTBs, excluding interest and penalties, during the years ended December 31:
(Dollars in millions)
2016
 
2015
Balance at January 1

$100

 

$210

Increases in UTBs related to prior years
18

 
4

Decreases in UTBs related to prior years
(4
)
 
(4
)
Increases in UTBs related to the current year
13

 
10

Decreases in UTBs related to settlements
(16
)
 
(119
)
Decreases in UTBs related to lapse of the applicable statutes of limitations
—

 
(1
)
Balance at December 31

$111

 

$100


The amount of UTBs that would favorably affect the Company's effective tax rate, if recognized, was $74 million at December 31, 2016.
Interest and penalties related to UTBs are recorded in the provision for income taxes. The Company had a gross liability of $8 million for interest and penalties related to its UTBs at both December 31, 2016 and 2015. During the years ended December 31, 2016 and 2015, the Company recognized a gross benefit of less than $1 million and $4 million, respectively, for interest and penalties on the UTBs.
The Company files U.S. federal, state, and local income tax returns. The Company's federal income tax returns are no longer subject to examination by the IRS for taxable years prior to 2011. With limited exceptions, the Company is no longer subject to examination by state and local taxing authorities for taxable years prior to 2012. It is reasonably possible that the liability for UTBs could decrease by as much as $5 million during the next 12 months due to completion of tax authority examinations and the expiration of statutes of limitations. It is uncertain how much, if any, of this potential decrease will impact the Company’s effective tax rate.