Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Reconciliation of Total Provision for Income Taxes with Amounts Computed at Federal Tax Rate of 35%

The following table reconciles the total provision for income taxes recorded in the consolidated statements of income with the amounts computed at the statutory federal tax rate of 35%.

TABLE 86: INCOME TAXES



	FOR THE YEAR ENDED DECEMBER 31,
(In Millions)	2017			2016			2015
Tax at Statutory Rate	$	571.9		$	531.0		$	512.7
Tax Exempt Income	(9.6		)	(7.2		)	(4.8		)
Foreign Tax Rate Differential	(50.0		)	(50.9		)	(44.2		)
Excess Tax Benefit Related to Share-Based Compensation	(31.6		)	(12.3		)	—
State Taxes, net	41.0			31.1			33.1
Impact of Tax Cuts and Jobs Act	(53.1		)	—			—
Other	(33.7		)	(7.1		)	(5.6		)

Provision for Income Taxes	$	434.9		$	484.6		$	491.2

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

TABLE 88: UNRECOGNIZED TAX BENEFITS



(In Millions)	2017			2016
Balance at January 1	$	17.2		$	12.3
Additions for Tax Positions Taken in the Current Year	9.9			—
Additions for Tax Positions Taken in Prior Years	6.2			6.6
Reductions for Tax Positions Taken in Prior Years	(5.4		)	(1.2		)
Reductions Resulting from Expiration of Statutes	(0.2		)	(0.5		)

Balance at December 31	$	27.7		$	17.2

Components of Consolidated Provision for Income Taxes

The components of the consolidated provision for income taxes for each of the three years ended December 31 are as follows:

TABLE 89: PROVISION FOR INCOME TAXES



	FOR THE YEAR ENDED DECEMBER 31,
(In Millions)	2017			2016			2015
Current Tax Provision:
Federal	$	347.3		$	495.8		$	489.8
State	38.3			65.3			64.5
Non-U.S.	125.4			99.3			83.1

Total	511.0			660.4			637.4
Deferred Tax Provision:
Federal	$	(96.4	)	$	(159.0	)	$	(131.1	)
State	24.6			(18.9		)	(13.6		)
Non-U.S.	(4.3		)	2.1			(1.5		)

Total	(76.1		)	(175.8		)	(146.2		)

Provision for Income Taxes	$	434.9		$	484.6		$	491.2

At December 31, 2017, Northern Trust has made a reasonable estimate as to the impact of the Tax Cuts and Jobs Act as follows:

TABLE 87: IMPACT OF TAX CUTS AND JOBS ACT




(In Millions)	2017
Federal Taxes on Mandatory Deemed Repatriation	$	150.0
Impact Related to Federal Deferred Taxes	(210.0		)
Other Adjustments	6.9

Provision (Benefit) for Income Taxes	$	(53.1	)

Tax Charges (Benefits) Recorded Directly to Stockholders' Equity

In addition to the amounts shown above, tax charges and benefits have been recorded directly to stockholders’ equity for the following:

TABLE 90: TAX CHARGES AND BENEFITS RECORDED DIRECTLY TO STOCKHOLDERS’ EQUITY



	FOR THE YEAR ENDED DECEMBER 31,
(In Millions)	2017			2016			2015
Current Tax Benefit (Charge) for Employee Stock Options and Other Stock-Based Plans	$	—		$	(7.6	)	$	17.7
Tax Effect of Other Comprehensive Income	(112.4		)	72.4			17.0

Deferred Tax Liabilities and Assets

Deferred tax assets and liabilities have been computed as follows:

TABLE 91: NET DEFERRED TAX LIABILITIES



	DECEMBER 31,
(In Millions)	2017			2016			2015
Deferred Tax Liabilities:
Lease Financing	$	85.8		$	148.7		$	272.6
Software Development	187.8			352.0			339.9
Accumulated Depreciation	41.0			26.0			20.6
Compensation and Benefits	—			50.2			70.7
State Taxes, net	59.4			33.3			48.8
Other Liabilities	145.7			243.1			169.1

Gross Deferred Tax Liabilities	519.7			853.3			921.7

Deferred Tax Assets:
Allowance for Credit Losses	32.3			67.2			81.7
Compensation and Benefits	35.5			—			—
Other Assets	88.3			233.8			185.0

Gross Deferred Tax Assets	156.1			301.0			266.7

Valuation Reserve	(1.1		)	(0.9		)	(1.6		)
Deferred Tax Assets, net of Valuation Reserve	155.0			300.1			265.1

Net Deferred Tax Liabilities	$	364.7		$	553.2		$	656.6