INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of components of income tax provision

Details of the Company’s income tax provision are presented below:

Income Tax Provision



In millions of dollars	2016			2015			2014
Current
Federal	$	1,016		$	861		$	181
Foreign	3,585			3,397			3,281
State	384			388			388
Total current income taxes	$	4,985		$	4,646		$	3,850
Deferred
Federal	$	1,280		$	3,019		$	2,510
Foreign	53			(4		)	361
State	126			(221		)	476
Total deferred income taxes	$	1,459		$	2,794		$	3,347
Provision for income tax on continuing operations before non-controlling interests⁽¹⁾	$	6,444		$	7,440		$	7,197
Provision (benefit) for income taxes on discontinued operations	(22		)	(29		)	12
Income tax expense (benefit) reported in stockholders’ equity related to:
FX translation	(402		)	(906		)	65
Investment securities	59			(498		)	1,007
Employee stock plans	13			(35		)	(87		)
Cash flow hedges	27			176			207
Benefit plans	(30		)	(24		)	(660		)
FVO DVA	(201		)	—			—
Retained earnings⁽²⁾	—			—			(353		)
Income taxes before non-controlling interests	$	5,888		$	6,124		$	7,388


(1)	Includes the effect of securities transactions and other-than-temporary-impairment losses resulting in a provision (benefit) of $332 million and $(217) million in 2016, $239 million and $(93) million in 2015 and $200 million and $(148) million in 2014, respectively.


(2)	See “Consolidated Statement of Changes in Stockholders’ Equity” above.

Schedule of effective income tax rate reconciliation

The reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate applicable to income from continuing operations (before non-controlling interests and the cumulative effect of accounting changes) for each of the periods indicated is as follows:



	2016		2015		2014
Federal statutory rate	35.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.8		1.7		3.4
Foreign income tax rate differential	(3.6	)	(4.6	)	(0.3	)
Audit settlements⁽¹⁾	(0.6	)	(1.7	)	(2.4	)
Effect of tax law changes⁽²⁾	—		0.4		1.2
Nondeductible legal and related expenses	—		0.3		18.3
Basis difference in affiliates	(0.1	)	—		(2.5	)
Tax advantaged investments	(2.4	)	(1.8	)	(3.6	)
Other, net	(0.1	)	0.7		(0.1	)
Effective income tax rate	30.0	%	30.0	%	49.0	%


(1)	For 2016, primarily relates to the conclusion of an IRS audit for 2012–2013. For 2015, primarily relates to the conclusion of a New York City tax audit for 2009–2011. For 2014, relates to the conclusion of the audit of various issues in the Company’s 2009–2011 U.S. federal tax audit and the conclusion of a New York State tax audit for 2006–2008.


(2)	For 2015, includes the results of tax reforms enacted in New York City and several states, which resulted in a DTA charge of approximately $101 million. For 2014, includes the results of tax reforms enacted in New York State and South Dakota, which resulted in a DTA charge of approximately $210 million.

Schedule of deferred tax assets and liabilities

Deferred income taxes at December 31 related to the following:



In millions of dollars	2016			2015
Deferred tax assets
Credit loss deduction	$	5,146		$	6,058
Deferred compensation and employee benefits	3,798			4,110
Repositioning and settlement reserves	1,033			1,429
Unremitted foreign earnings	9,311			8,403
Investment and loan basis differences	4,829			3,248
Cash flow hedges	327			359
Tax credit and net operating loss carry-forwards	20,793			23,053
Fixed assets and leases	1,739			1,356
Other deferred tax assets	2,714			3,176
Gross deferred tax assets	$	49,690		$	51,192
Valuation allowance	—			—
Deferred tax assets after valuation allowance	$	49,690		$	51,192
Deferred tax liabilities
Deferred policy acquisition costs and value of insurance in force	$	(5	)	$	(327	)
Intangibles	(1,711		)	(1,146		)
Debt issuances	(641		)	(850		)
Other deferred tax liabilities	(665		)	(1,020		)
Gross deferred tax liabilities	$	(3,022	)	$	(3,343	)
Net deferred tax assets	$	46,668		$	47,849

Summary of unrecognized tax benefits

The following is a rollforward of the Company’s unrecognized tax benefits.



In millions of dollars	2016			2015			2014
Total unrecognized tax benefits at January 1	$	1,235		$	1,060		$	1,574
Net amount of increases for current year’s tax positions	34			32			135
Gross amount of increases for prior years’ tax positions	273			311			175
Gross amount of decreases for prior years’ tax positions	(225		)	(61		)	(772		)
Amounts of decreases relating to settlements	(174		)	(45		)	(28		)
Reductions due to lapse of statutes of limitation	(21		)	(22		)	(30		)
Foreign exchange, acquisitions and dispositions	(30		)	(40		)	6
Total unrecognized tax benefits at December 31	$	1,092		$	1,235		$	1,060

Schedule of income tax penalties and interest accrued

Interest and penalties (not included in “unrecognized tax benefits” above) are a component of the Provision for income taxes.



	2016				2015						2014
In millions of dollars	Pretax		Net of tax		Pretax			Net of tax			Pretax			Net of tax
Total interest and penalties in the Consolidated Balance Sheet at January 1	$	233	$	146	$	269		$	169		$	277		$	173
Total interest and penalties in the Consolidated Statement of Income	105		68		(29		)	(18		)	(1		)	(1		)
Total interest and penalties in the Consolidated Balance Sheet at December 31⁽¹⁾	260		164		233			146			269			169


(1)	Includes $3 million, $3 million, and $2 million for foreign penalties in 2016, 2015 and 2014, respectively. Also includes $3 million for state penalties in 2016, 2015 and 2014.

Schedule of major jurisdictions and earliest tax year subject to examination

The following are the major tax jurisdictions in which the Company and its affiliates operate and the earliest tax year subject to examination:



Jurisdiction	Tax year
United States	2014
Mexico	2009
New York State and City	2006
United Kingdom	2014
India	2013
Singapore	2011
Hong Kong	2010
Ireland	2012

Schedule of deferred tax assets and liabilities by jurisdiction

As of December 31, 2016 and 2015, Citi had no valuation allowance on its DTAs. The following table summarizes Citi’s DTAs.



In billions of dollars
Jurisdiction/component	DTAs balance December 31, 2016		DTAs balance December 31, 2015
U.S. federal⁽¹⁾
Net operating losses (NOLs)⁽²⁾	$	3.5	$	3.4
Foreign tax credits (FTCs)⁽³⁾	14.2		15.9
General business credits (GBCs)	0.9		1.3
Future tax deductions and credits	21.9		20.7
Total U.S. federal	$	40.5	$	41.3
State and local
New York NOLs	$	2.2	$	2.4
Other state NOLs	0.2		0.3
Future tax deductions	1.7		1.2
Total state and local	$	4.1	$	3.9
Foreign
APB 23 subsidiary NOLs	$	0.1	$	0.2
Non-APB 23 subsidiary NOLs	0.4		0.4
Future tax deductions	1.6		2.0
Total foreign	$	2.1	$	2.6
Total	$	46.7	$	47.8


(1)	Included in the net U.S. federal DTAs of $40.5 billion as of December 31, 2016 were deferred tax liabilities of $2 billion that will reverse in the relevant carry-forward period and may be used to support the DTAs.

(2)

2016 consists of non-consolidated tax return NOL carry-forwards that are eventually expected to be utilized in Citigroup’s consolidated tax return. 2015 includes $0.5 billion of non-consolidated NOL carry-forwards that were used in 2016 separately from Citigroup’s consolidated tax return, and $2.9 billion of non-consolidated tax return NOL carry-forwards that are eventually expected to be utilized in Citigroup’s consolidated tax return.


(3)	Includes $1.9 billion and $1.7 billion for 2016 and 2015, respectively, of non-consolidated tax return FTC carry-forwards that are eventually expected to be utilized in Citigroup’s consolidated tax return.

Summary of tax carryforwards

The following table summarizes the amounts of tax carry-forwards and their expiration dates:



In billions of dollars
Year of expiration	December 31, 2016		December 31, 2015
U.S. tax return foreign tax credit carry-forwards
2018	$	2.7	$	4.8
2019	1.3		1.2
2020	3.1		3.1
2021	1.9		1.7
2022	3.3		3.4
2023⁽¹⁾	0.5		0.4
2025⁽¹⁾	1.4		1.3
Total U.S. tax return foreign tax credit carry-forwards	$	14.2	$	15.9
U.S. tax return general business credit carry-forwards
2031	$	—	$	0.2
2032	—		0.4
2033	0.3		0.3
2034	0.2		0.2
2035	0.2		0.2
2036	0.2		—
Total U.S. tax return general business credit carry-forwards	$	0.9	$	1.3
U.S. subsidiary separate federal NOL carry-forwards
2027	$	0.2	$	0.2
2028	0.1		0.1
2030	0.3		0.3
2031	—		1.5
2033	1.7		1.7
2034	2.3		2.3
2035	3.2		3.6
2036	2.2		—
Total U.S. subsidiary separate federal NOL carry-forwards⁽²⁾	$	10.0	$	9.7
New York State NOL carry-forwards⁽²⁾
2034	$	13.0	$	14.6
New York City NOL carry-forwards⁽²⁾
2034	$	12.2	$	13.3
APB 23 subsidiary NOL carry-forwards
Various	$	0.1	$	0.2


(1)	The $1.9 billion in FTC carry-forwards that expire in 2023 and 2025 are in a non-consolidated tax return entity but are eventually expected to be utilized in Citigroup’s consolidated tax return.


(2)	Pretax.