Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Summary of Income (Loss) Before Income Taxes

The following table summarizes income before income taxes (in millions):



	Years Ended December 31,
	2014		2013		2012
U.S. income	$	481	$	637	$	732
Non-U.S. income	334		246		12
Income before income taxes	$	815	$	883	$	744

Summary of Income Tax Expense (Benefit)

The following table summarizes income tax expense (in millions):



	Years Ended December 31,
	2014			2013			2012
Current income tax expense:
U.S. federal	$	284		$	67		$	254
U.S. state and local	14			5			23
Non-U.S.	63			66			1
Total current	361			138			278
Deferred income tax expense:
U.S. federal	(87		)	176			(4		)
U.S. state and local	(5		)	7			5
Non-U.S.	9			(4		)	2
Total deferred	(83		)	179			3
Total income tax provision	$	278		$	317		$	281

Effective Income Tax Rate Reconciliation

Our effective income tax rate on income before income taxes differs from the U.S. statutory rate as follows:



	Years Ended December 31,
	2014		2013		2012
U.S. statutory tax rate	35.0	%	35.0	%	35.0	%
Non-U.S. income taxed at other than 35%	(2.2	)	(1.7	)	—
State and local income taxes	1.2		1.1		1.2
U.S. tax on non-U.S. earnings	7.2		(1.7	)	—
Adjustment to reserve for uncertain tax positions, net	(0.3	)	0.2		1.2
Valuation allowance	(4.9	)	3.4		—
Other	(2.0	)	(0.4	)	0.4
Effective tax rate	34.0	%	35.9	%	37.8	%

Schedule of Deferred Tax Assets and Liabilities

The following table summarizes the components of temporary differences and carryforwards that give rise to deferred tax assets and liabilities (in millions):



	December 31, 2014			December 31, 2013
Deferred tax assets:
Net operating loss carryforward^(a)	$	205		$	254
Market value difference of loan portfolio	349			117
Purchase accounting adjustments	37			56
Accruals	157			131
Income tax benefits from uncertain tax positions	31			31
Other	81			101
Total deferred tax assets before valuation allowance	860			690
Less: valuation allowance	(57		)	(104		)
Total deferred tax assets	803			586
Deferred tax liabilities:
Capitalized direct loan origination costs	22			18
Fee income	21			32
Depreciable assets	300			153
Intangible assets	35			40
Accrued commissions	41			28
Deferred acquisition costs/revenue	50			30
Other	13			13
Total deferred tax liabilities	482			314
Net deferred tax asset	$	321		$	272

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(a)	Includes tax-effected operating losses of $58 million expiring through 2035 and $147 million that may be carried forward indefinitely at December 31, 2014.

Summary of Unrecognized Tax Benefits Activity

The following table summarizes activity of unrecognized tax benefits (in millions):



	Years Ended December 31,
	2014			2013			2012
Beginning balance	$	130		$	53		$	48
International operations acquired amounts	—			71			—
Additions to prior years' tax positions	1			—			1
Reductions to prior years' tax positions	(12		)	(1		)	(2		)
Additions to current year tax positions	7			12			9
Reductions in tax positions due to lapse of statutory limitations	(6		)	(3		)	—
Settlements	(20		)	(1		)	(3		)
Foreign currency translation	(5		)	(1		)	—
Ending balance	$	95		$	130		$	53