Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.24.0.1
Income Taxes (Tables)
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Schedule of Components of Income Tax Expense (Benefit)
The components of income tax expense for 2023, 2022 and 2021 are presented in the table below.
Income Tax Expense
(Dollars in millions) 2023 2022 2021
Current income tax expense      
U.S. federal $ 1,361  $ 1,157  $ 1,076 
U.S. state and local 559  389  775 
Non-U.S.  1,918  1,156  985 
Total current expense 3,838  2,702  2,836 
Deferred income tax expense      
U.S. federal (2,241) 110  962 
U.S. state and local (53) 254  491 
Non-U.S.  283  375  (2,291)
Total deferred expense (2,011) 739  (838)
Total income tax expense $ 1,827  $ 3,441  $ 1,998 
Schedule of Effective Income Tax Rate Reconciliation A reconciliation of the expected U.S. federal income tax expense, calculated by applying the federal statutory tax rate, to the Corporation’s actual income tax expense, and the effective tax rates for 2023, 2022 and 2021 are presented in the following table.
Reconciliation of Income Tax Expense
  Amount Percent Amount Percent Amount Percent
(Dollars in millions) 2023 2022 2021
Expected U.S. federal income tax expense $ 5,952  21.0  % $ 6,504  21.0  % $ 7,135  21.0  %
Increase (decrease) in taxes resulting from:
State tax expense, net of federal benefit 475  1.7  756  2.4  1,087  3.2 
Affordable housing/energy/other credits (4,920) (17.4) (3,698) (11.9) (3,795) (11.2)
Tax-exempt income, including dividends (373) (1.3) (273) (0.9) (352) (1.0)
Tax law changes (137) (0.5) 186  0.6  (2,050) (6.0)
Changes in prior-period UTBs, including interest (26) (0.1) (273) (0.9) (155) (0.5)
Rate differential on non-U.S. earnings 601  2.1  368  1.2  45  0.1 
Nondeductible expenses 367  1.3  352  1.1  206  0.6 
Other (112) (0.4) (481) (1.5) (123) (0.3)
Total income tax expense $ 1,827  6.4  % $ 3,441  11.1  % $ 1,998  5.9  %
Reconciliation of Change in Unrecognized Tax Benefits
The reconciliation of the beginning unrecognized tax benefits (UTB) balance to the ending balance is presented in the table below.
Reconciliation of the Change in Unrecognized Tax Benefits
(Dollars in millions) 2023 2022 2021
Balance, January 1 $ 1,056  $ 1,322  $ 1,340 
Increases related to positions taken during the current year
 76  121  208 
Increases related to positions taken during prior years (1)
139  167  265 
Decreases related to positions taken during prior years (1)
(32) (289) (413)
Settlements (380) (99) (23)
Expiration of statute of limitations (48) (166) (55)
Balance, December 31 $ 811  $ 1,056  $ 1,322 
(1)    The sum of the positions taken during prior years differs from the $(26) million, $(273) million and $(155) million in the Reconciliation of Income Tax Expense table due to temporary items, state items and jurisdictional offsets, as well as the inclusion of interest in the Reconciliation of Income Tax Expense table.
Summary of Income Tax Examinations The table below summarizes the status of examinations by major jurisdiction for the Corporation and various subsidiaries at December 31, 2023.
Tax Examination Status
Years under
Examination (1)
Status at
December 31, 2023
United States 2017-2021 Field Examination
California 2015-2017 Field Examination
California 2018-2021 To begin in 2024
New York 2019-2021 Field Examination
United Kingdom (2)
2021 Field Examination
(1)    All tax years subsequent to the years shown remain subject to examination.
(2) Field examination for tax year 2022 to begin in 2024.
Schedule of Deferred Tax Assets and Liabilities
Significant components of the Corporation’s net deferred tax assets and liabilities at December 31, 2023 and 2022 are presented in the following table.
Deferred Tax Assets and Liabilities
  December 31
(Dollars in millions) 2023 2022
Deferred tax assets    
Tax attribute carryforwards (1)
$ 11,084  $ 9,798 
Security, loan and debt valuations (2)
3,991  5,748 
Allowance for credit losses 3,518  3,503 
Lease liability 2,328  2,443 
Employee compensation and retirement benefits 1,698  1,625 
Accrued expenses 1,640  1,143 
Other 1,475  1,371 
Gross deferred tax assets 25,734  25,631 
Valuation allowance (2,108) (2,133)
Total deferred tax assets, net of valuation
   allowance		 23,626  23,498 
   
Deferred tax liabilities
Equipment lease financing 2,488  2,432 
Right-of-use asset 2,180  2,303 
Tax credit investments 1,884  1,759 
Fixed Assets 789  1,200 
Other 1,913  2,459 
Gross deferred tax liabilities 9,254  10,153 
Net deferred tax assets $ 14,372  $ 13,345 
(1)Includes both net operating loss and tax credit carryforwards.
(2)Includes AFS debt securities.
Schedule of Operating Loss Carryforwards
The table below summarizes the deferred tax assets and related valuation allowances recognized for the net operating loss (NOL) and tax credit carryforwards at December 31, 2023.
Net Operating Loss and Tax Credit Carryforward Deferred Tax Assets
(Dollars in millions) Deferred
Tax Asset		 Valuation
Allowance		 Net
Deferred
Tax Asset		 First Year
Expiring
Net operating losses - U.K. (1)
$ 7,588  $ —  $ 7,588  None
Net operating losses - other non-U.S. 
 235  (44) 191  Various
Net operating losses - U.S. states (2)
807  (471) 336  Various
General business credits 1,557  —  1,557  Various
Foreign tax credits 897  (897) —  After 2028
(1)Represents U.K. broker-dealer net operating losses that may be carried forward indefinitely.
(2)The net operating losses and related valuation allowances for U.S. states before considering the benefit of federal deductions were $1.0 billion and $597 million.
Summary of Tax Credit Carryforwards
The table below summarizes the deferred tax assets and related valuation allowances recognized for the net operating loss (NOL) and tax credit carryforwards at December 31, 2023.
Net Operating Loss and Tax Credit Carryforward Deferred Tax Assets
(Dollars in millions) Deferred
Tax Asset		 Valuation
Allowance		 Net
Deferred
Tax Asset		 First Year
Expiring
Net operating losses - U.K. (1)
$ 7,588  $ —  $ 7,588  None
Net operating losses - other non-U.S. 
 235  (44) 191  Various
Net operating losses - U.S. states (2)
807  (471) 336  Various
General business credits 1,557  —  1,557  Various
Foreign tax credits 897  (897) —  After 2028
(1)Represents U.K. broker-dealer net operating losses that may be carried forward indefinitely.
(2)The net operating losses and related valuation allowances for U.S. states before considering the benefit of federal deductions were $1.0 billion and $597 million.