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Income Taxes (Tables)
12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
Components of income tax expense/(benefit) included in the Consolidated Statements of Income
The components of income tax expense/(benefit) included in the Consolidated Statements of Income were as follows for each of the years ended December 31, 2012, 2011, and 2010.
Income tax expense/(benefit)
Year ended December 31,
(in millions)
 
2012

 
2011

 
2010

Current income tax expense
 
 
 
 
 
 
U.S. federal
 
$
3,225

 
$
3,719

 
$
4,001

Non-U.S.
 
1,782

 
1,183

 
2,712

U.S. state and local
 
1,496

 
1,178

 
1,744

Total current income tax expense
 
6,503

 
6,080

 
8,457

Deferred income tax expense/(benefit)
 
 
 
 
 
 
U.S. federal
 
2,238

 
2,109

 
(753
)
Non-U.S.
 
(327
)
 
102

 
169

U.S. state and local
 
(781
)
 
(518
)
 
(384
)
Total deferred income tax expense/(benefit)
 
1,130

 
1,693

 
(968
)
Total income tax expense
 
$
7,633

 
$
7,773

 
$
7,489

Reconciliation of the applicable statutory U.S. income tax rate to the effective tax rate the effective tax rate
A reconciliation of the applicable statutory U.S. income tax rate to the effective tax rate for each of the years ended December 31, 2012, 2011 and 2010, is presented in the following table.
Effective tax rate
Year ended December 31,
 
2012

 
2011

 
2010

Statutory U.S. federal tax rate
 
35.0
 %
 
35.0
 %
 
35.0
 %
Increase/(decrease) in tax rate resulting from:
 
 
 
 
 
 
U.S. state and local income taxes, net of U.S. federal income tax benefit
 
1.6

 
1.6

 
3.6

Tax-exempt income
 
(2.9
)
 
(2.1
)
 
(2.4
)
Non-U.S. subsidiary earnings(a)
 
(2.4
)
 
(2.3
)
 
(2.2
)
Business tax credits
 
(4.2
)
 
(4.0
)
 
(3.7
)
Other, net
 
(0.7
)
 
0.9

 
(0.2
)
Effective tax rate
 
26.4
 %
 
29.1
 %
 
30.1
 %
(a)
Includes earnings deemed to be reinvested indefinitely in non-U.S. subsidiaries.
Significant Components of Deferred Tax Assets and Liabilities
The significant components of deferred tax assets and liabilities are reflected in the following table as of December 31, 2012 and 2011.
Deferred taxes
 
 
 
 
December 31, (in millions)
 
2012

 
2011

Deferred tax assets
 
 
 
 
Allowance for loan losses
 
$
8,712

 
$
10,689

Employee benefits
 
4,308

 
4,570

Accrued expenses and other(a)
 
12,393

 
11,183

Non-U.S. operations
 
3,537

 
2,943

Tax attribute carryforwards
 
1,062

 
1,547

Gross deferred tax assets(a)
 
30,012

 
30,932

Valuation allowance
 
(689
)
 
(1,303
)
Deferred tax assets, net of valuation allowance(a)
 
$
29,323

 
$
29,629

Deferred tax liabilities
 
 
 
 
Depreciation and amortization(a)
 
$
2,563

 
$
2,799

Mortgage servicing rights, net of hedges (a)
 
5,336

 
4,396

Leasing transactions(a)
 
2,242

 
2,348

Non-U.S. operations
 
3,582

 
2,790

Other, net(a)
 
4,340

 
2,520

Gross deferred tax liabilities(a)
 
18,063

 
14,853

Net deferred tax assets
 
$
11,260

 
$
14,776

(a)
The prior period has been revised to conform with the current presentation.
Reconciliation of the beginning and ending amount of unrecognized tax benefits
The following table presents a reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2012, 2011 and 2010.
Unrecognized tax benefits
Year ended December 31,
(in millions)
 
2012

 
2011

 
2010

Balance at January 1,
 
$
7,189

 
$
7,767

 
$
6,608

Increases based on tax positions related to the current period
 
680

 
516

 
813

Decreases based on tax positions related to the current period
 

 
(110
)
 
(24
)
Increases based on tax positions related to prior periods
 
234

 
496

 
1,681

Decreases based on tax positions related to prior periods
 
(853
)
 
(1,433
)
 
(1,198
)
Decreases related to settlements with taxing authorities
 
(50
)
 
(16
)
 
(74
)
Decreases related to a lapse of applicable statute of limitations
 
(42
)
 
(31
)
 
(39
)
Balance at December 31,
 
$
7,158

 
$
7,189

 
$
7,767

U.S. and non-U.S. components of income before income tax expense/(benefit) and extraordinary gain income
The following table presents the U.S. and non-U.S. components of income before income tax expense for the years ended December 31, 2012, 2011 and 2010.
Income before income tax expense - U.S. and non-U.S.
Year ended December 31,
(in millions)
 
2012

 
2011

 
2010

U.S.
 
$
24,895

 
$
16,336

 
$
16,568

Non-U.S.(a)
 
4,022

 
10,413

 
8,291

Income before income tax expense
 
$
28,917

 
$
26,749

 
$
24,859

(a)
For purposes of this table, non-U.S. income is defined as income generated from operations located outside the U.S.