Income Taxes (Tables)
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12 Months Ended |
Dec. 31, 2016 |
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| Income Tax Disclosure [Abstract] |
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| Schedule of Components of Income Tax Expense (Benefit) |
The components of income tax expense for 2016, 2015 and 2014 are presented in the table below.
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Income Tax Expense |
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(Dollars in millions) |
2016 |
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2015 |
|
2014 |
Current income tax expense |
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U.S. federal |
$ |
302 |
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$ |
2,539 |
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$ |
443 |
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U.S. state and local |
120 |
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|
210 |
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|
340 |
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Non-U.S. |
984 |
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|
561 |
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|
513 |
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Total current expense |
1,406 |
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|
3,310 |
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|
1,296 |
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Deferred income tax expense |
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U.S. federal |
5,464 |
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1,812 |
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|
953 |
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U.S. state and local |
(279 |
) |
|
515 |
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|
136 |
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Non-U.S. |
656 |
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|
597 |
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58 |
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Total deferred expense |
5,841 |
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|
2,924 |
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|
1,147 |
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Total income tax expense |
$ |
7,247 |
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$ |
6,234 |
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$ |
2,443 |
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| 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 of 35 percent, to the Corporation’s actual income tax expense, and the effective tax rates for 2016, 2015 and 2014 are presented in the table below.
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Reconciliation of Income Tax Expense |
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2016 |
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2015 |
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2014 |
(Dollars in millions) |
Amount |
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Percent |
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Amount |
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Percent |
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Amount |
|
Percent |
Expected U.S. federal income tax expense |
$ |
8,804 |
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|
35.0 |
% |
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$ |
7,725 |
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35.0 |
% |
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$ |
2,787 |
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35.0 |
% |
Increase (decrease) in taxes resulting from: |
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State tax expense, net of federal benefit |
420 |
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1.7 |
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438 |
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1.9 |
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|
322 |
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4.0 |
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Affordable housing/energy/other credits |
(1,203 |
) |
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(4.8 |
) |
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(1,087 |
) |
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(4.9 |
) |
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(950 |
) |
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(11.9 |
) |
Tax-exempt income, including dividends |
(562 |
) |
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(2.3 |
) |
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(539 |
) |
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(2.4 |
) |
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(533 |
) |
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(6.6 |
) |
Changes in prior-period UTBs, including interest |
(328 |
) |
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(1.3 |
) |
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(52 |
) |
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(0.2 |
) |
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(754 |
) |
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(9.5 |
) |
Non-U.S. tax rate differential |
(307 |
) |
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(1.2 |
) |
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(559 |
) |
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(2.5 |
) |
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(507 |
) |
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(6.4 |
) |
Non-U.S. tax law changes |
348 |
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1.4 |
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|
289 |
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1.3 |
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— |
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— |
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Nondeductible expenses |
180 |
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0.7 |
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|
40 |
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0.1 |
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1,982 |
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|
24.9 |
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Other |
(105 |
) |
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(0.4 |
) |
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(21 |
) |
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(0.1 |
) |
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96 |
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1.2 |
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Total income tax expense |
$ |
7,247 |
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|
28.8 |
% |
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$ |
6,234 |
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28.2 |
% |
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$ |
2,443 |
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30.7 |
% |
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| 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.
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Reconciliation of the Change in Unrecognized Tax Benefits |
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(Dollars in millions) |
2016 |
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2015 |
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2014 |
Balance, January 1 |
$ |
1,095 |
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$ |
1,068 |
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$ |
3,068 |
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Increases related to positions taken during the current year |
104 |
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36 |
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|
75 |
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Increases related to positions taken during prior years
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1,318 |
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|
187 |
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|
519 |
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Decreases related to positions taken during prior years |
(1,091 |
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(177 |
) |
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(973 |
) |
Settlements |
(503 |
) |
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(1 |
) |
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(1,594 |
) |
Expiration of statute of limitations |
(48 |
) |
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(18 |
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(27 |
) |
Balance, December 31 |
$ |
875 |
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$ |
1,095 |
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$ |
1,068 |
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| Summary of Income Tax Examinations |
The Tax Examination Status table summarizes the status of examinations by major jurisdiction for the Corporation and various subsidiaries as of December 31, 2016.
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Tax Examination Status |
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Years under
Examination (1)
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Status at December 31 2016 |
U.S. |
2012 – 2013 |
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Field examination |
New York |
2015 |
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To begin in 2017 |
U.K. |
2012-2014 |
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Field examination |
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(1) |
All tax years subsequent to the years shown remain subject to examination. |
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| Schedule of Deferred Tax Assets and Liabilities |
Significant components of the Corporation’s net deferred tax assets and liabilities at December 31, 2016 and 2015 are presented in the table below.
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Deferred Tax Assets and Liabilities |
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December 31 |
(Dollars in millions) |
2016 |
|
2015 |
Deferred tax assets |
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Net operating loss carryforwards |
$ |
9,199 |
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$ |
9,439 |
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Security, loan and debt valuations |
4,726 |
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4,919 |
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Allowance for credit losses |
4,362 |
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4,649 |
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Tax credit carryforwards |
3,125 |
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2,266 |
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Accrued expenses |
3,016 |
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|
6,340 |
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Employee compensation and retirement benefits |
2,677 |
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3,593 |
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Available-for-sale securities |
784 |
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152 |
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Other |
1,599 |
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2,483 |
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Gross deferred tax assets |
29,488 |
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33,841 |
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Valuation allowance |
(1,117 |
) |
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(1,149 |
) |
Total deferred tax assets, net of valuation allowance |
28,371 |
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32,692 |
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Deferred tax liabilities |
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Equipment lease financing |
3,489 |
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3,014 |
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Intangibles |
1,171 |
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1,306 |
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Fee income |
847 |
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|
864 |
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Mortgage servicing rights |
829 |
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|
689 |
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Long-term borrowings |
355 |
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|
327 |
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Other |
2,454 |
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|
1,859 |
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Gross deferred tax liabilities |
9,145 |
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|
8,059 |
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Net deferred tax assets, net of valuation allowance |
$ |
19,226 |
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$ |
24,633 |
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| Deferred Tax Assets And Related Valuation Allowances Recognized For Net Operating And Other Loss Carryforwards And 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, 2016.
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Net Operating Loss and Tax Credit Carryforward Deferred Tax Assets |
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(Dollars in millions) |
Deferred
Tax Asset
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Valuation
Allowance
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Net
Deferred
Tax Asset
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First Year
Expiring
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Net operating losses – U.S. |
$ |
1,908 |
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$ |
— |
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$ |
1,908 |
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After 2027 |
Net operating losses – U.K. |
5,410 |
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— |
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5,410 |
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None (1)
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Net operating losses – other non-U.S. |
411 |
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|
(311 |
) |
|
100 |
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Various |
Net operating losses – U.S. states (2)
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1,470 |
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|
(398 |
) |
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1,072 |
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Various |
General business credits |
3,053 |
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— |
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3,053 |
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After 2031 |
Foreign tax credits |
72 |
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(72 |
) |
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— |
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n/a |
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(1) |
The U.K. net operating losses may be carried forward indefinitely. |
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(2) |
The net operating losses and related valuation allowances for U.S. states before considering the benefit of federal deductions were $2.3 billion and $612 million.
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n/a = not applicable
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| 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, 2016.
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Net Operating Loss and Tax Credit Carryforward Deferred Tax Assets |
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(Dollars in millions) |
Deferred
Tax Asset
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Valuation
Allowance
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Net
Deferred
Tax Asset
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First Year
Expiring
|
Net operating losses – U.S. |
$ |
1,908 |
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$ |
— |
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$ |
1,908 |
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After 2027 |
Net operating losses – U.K. |
5,410 |
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— |
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|
5,410 |
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None (1)
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Net operating losses – other non-U.S. |
411 |
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|
(311 |
) |
|
100 |
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Various |
Net operating losses – U.S. states (2)
|
1,470 |
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|
(398 |
) |
|
1,072 |
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Various |
General business credits |
3,053 |
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— |
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|
3,053 |
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After 2031 |
Foreign tax credits |
72 |
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|
(72 |
) |
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— |
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n/a |
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(1) |
The U.K. net operating losses may be carried forward indefinitely. |
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(2) |
The net operating losses and related valuation allowances for U.S. states before considering the benefit of federal deductions were $2.3 billion and $612 million.
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n/a = not applicable
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