Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes Included in Income Statement

Income taxes included in the income statement are summarized below. We file a consolidated federal income tax return.

Year ended December 31, in millions	2019		2018			2017
Currently payable:
Federal	$	241	$	184		$	334
State	20		62			—
Total currently payable	261		246			334
Deferred:
Federal	34		117			274
State	19		(19		)	29
Total deferred	53		98			303
Total income tax (benefit) expense (a)	$	314	$	344		$	637

(a) There was income tax (benefit) expense on securities transactions of $5 million in 2019, and no income tax (benefit) expense on securities transactions in 2018 and 2017. Income tax expense excludes equity- and gross receipts-based taxes, which are assessed in lieu of an income tax in certain states in which we operate. These non-income taxes, which are recorded in “noninterest expense” on the income statement, totaled $23 million in 2019, $15 million in 2018, and $22 million in 2017.

Significant Components of Deferred Tax Assets and Liabilities Included in "Accrued Income and Other Assets" and "Accrued Expense and Other Liabilities"

Significant components of our deferred tax assets and liabilities included in “accrued income and other assets” and “accrued expense and other liabilities,” respectively, on the balance sheet, are as follows:

 

December 31, in millions	2019			2018
Allowance for loan and lease losses	$	236		$	232
Employee benefits	164			170
Net unrealized securities losses	—			144
Federal net operating losses and credits	81			34
Fair value adjustments	21			41
Non-tax accruals	61			80
Operating lease liabilities (a)	178			—
State net operating losses and credits	1			3
Other	245			221
Gross deferred tax assets	987			925
Less: Valuation Allowance	—			11
Total deferred tax assets	987			914
Leasing transactions	628			531
Net unrealized securities gains	117			—
Operating lease right-of-use assets (a)	156			—
Other	175			161
Total deferred tax liabilities	1,076			692
Net deferred tax assets (liabilities) (b)	$	(89	)	$	222

(a) A separate deferred tax asset and liability is recognized for each operating lease item resulting from the adoption of ASC 842 in 2019.

(b) From continuing operations.

Total Income Tax Expense (Benefit) and Resulting Effective Tax Rate

The following table shows how our total income tax expense (benefit) and the resulting effective tax rate were derived:

Year ended December 31, dollars in millions	2019					2018					2017
	Amount			Rate		Amount			Rate		Amount			Rate
Income (loss) before income taxes times 21% (35% for 2017) statutory federal tax rate	$	425		21.0	%	$	463		21.0	%	$	675		35.0	%
Amortization of tax-advantaged investments	132			6.5		127			5.8		104			5.4
Foreign tax adjustments	—			—		2			.1		1			.1
Tax-exempt interest income	(30		)	(1.5	)	(30		)	(1.4	)	(37		)	(1.9	)
Corporate-owned life insurance income	(29		)	(1.4	)	(29		)	(1.3	)	(46		)	(2.4	)
State income tax, net of federal tax benefit	31			1.5		34			1.5		19			1.0
Tax credits	(231		)	(11.4	)	(234		)	(10.6	)	(218		)	(11.3	)
Tax Cuts and Jobs Act	—			—		7			.3		147			7.6
Other	16			.9		4			.2		(8		)	(.5	)
Total income tax expense (benefit)	$	314		15.6	%	$	344		15.6	%	$	637		33.0	%

Change in Liability for Unrecognized Tax Benefits

The change in our liability for unrecognized tax benefits is as follows:

Year ended December 31, in millions	2019			2018
Balance at beginning of year	$	35		$	39
Increase for other tax positions of prior years	2			15
Decrease for payments and settlements	—			—
Decrease related to tax positions taken in prior years	(18		)	(19		)
Balance at end of year	$	19		$	35