Income Tax Provision (Tables)

12 Months Ended

Mar. 31, 2015

The provision for income taxes consisted of the following:

	Years ended March 31,
(Dollars in millions)	2015			2014			2013
Current
Federal	$	(25	)	$	(24	)	$	(15	)
State		(15	)		(3	)		41
Foreign		9			8			6
Total current		(31	)		(19	)		32
Deferred
Federal		644			460			721
State		117			54			69
Foreign		(1	)		2			2
Total deferred		760			516			792
Provision for income taxes	$	729		$	497		$	824

Reconciliation Between U.S. Federal Statutory Tax Rate and Effective Tax Rate

A reconciliation between the U.S. federal statutory tax rate and the effective tax rate is as follows:

	Years ended March 31,
	2015			2014			2013
Provision for income taxes at U.S. federal statutory tax rate		35.0	%		35.0	%		35.0	%
State and local taxes (net of federal tax benefit)		3.2	%		3.1	%		3.2	%
Other		(0.3	)%		(1.4	)%		-	%
Effective tax rate		37.9	%		36.7	%		38.2	%

Deferred Federal and State Income Tax Liabilities

The net deferred income tax liabilities, by tax jurisdiction, are as follows:

	March 31,
(Dollars in millions)	2015		2014
Federal	$	6,873	$	6,217
State		646		529
Foreign		-		1
Net deferred income tax liability	$	7,519	$	6,747

Deferred Tax Liabilities and Assets

Our net deferred income tax liability consists of the following deferred tax liabilities and assets:

	March 31,
(Dollars in millions)	2015			2014¹
Liabilities:
Lease transactions	$	8,576		$	7,115
State taxes		570			482
Mark-to-market of investments in marketable securities and derivatives		292			138
Other		329			295
Deferred tax liabilities	$	9,767		$	8,030

Assets:
Provision for credit and residual value losses		328			292
Deferred costs and fees		258			211
Net operating loss and tax credit carryforwards		1,615			742
Other		67			56
Deferred tax assets		2,268			1,301
Valuation allowance		(20	)		(18	)
Net deferred tax assets	$	2,248		$	1,283
Net deferred income tax liability²	$	7,519		$	6,747

¹ Certain prior period amounts have been reclassified to conform to the current period presentation.

² Balance includes deferred tax liabilities attributable to unrealized gain or loss included in accumulated other comprehensive income or loss, net of $136 million and $124 million at March 31, 2015 and 2014, respectively. The change in this deferred liability is not included in total deferred tax expense.

Change in Unrecognized Tax Benefits

The change in unrecognized tax benefits in fiscal 2015, 2014 and 2013 are as follows:

	March 31,
(Dollars in millions)	2015			2014			2013
Balance at beginning of the year	$	6		$	7		$	8
Increases related to positions taken during the current year		-			-			1
Decreases related to positions taken during the prior years		-			(1	)		-
Settlements		(6	)		-			(2	)
Balance at end of year	$	-		$	6		$	7