INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of components of income tax provision

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



In millions of dollars	2018			2017			2016
Current
Federal	$	834		$	332		$	1,016
Non-U.S.	4,290			3,910			3,585
State	284			269			384
Total current income taxes	$	5,408		$	4,511		$	4,985
Deferred
Federal	$	(620	)	$	24,902		$	1,280
Non-U.S.	371			(377		)	53
State	198			352			126
Total deferred income taxes	$	(51	)	$	24,877		$	1,459
Provision for income tax on continuing operations before noncontrolling interests⁽¹⁾	$	5,357		$	29,388		$	6,444
Provision (benefit) for income taxes on discontinued operations	(18		)	7			(22		)
Income tax expense (benefit) reported in stockholders’ equity related to:
FX translation	(263		)	188			(402		)
Investment securities	(346		)	(149		)	59
Employee stock plans	(2		)	(4		)	13
Cash flow hedges	(8		)	(12		)	27
Benefit plans	(20		)	13			(30		)
FVO DVA	302			(250		)	(201		)
Excluded fair value hedges	(17		)	—			—
Retained earnings⁽²⁾	(305		)	(295		)	—
Income taxes before noncontrolling interests	$	4,680		$	28,886		$	5,888


(1)	Includes the effect of securities transactions and other-than-temporary-impairment losses resulting in a provision (benefit) of $104 million and $(32) million in 2018, $272 million and $(22) million in 2017 and $332 million and $(217) million in 2016, respectively.


(2)	2018 reflects the tax effect of the accounting change for ASU 2016-16 and the tax effect of the accounting change for ASU 2018-03, to report the net unrealized gains on former AFS equity securities. 2017 reflects the tax effect of the accounting change for ASU 2017-08. See Note 1 to the Consolidated Financial Statements.

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 noncontrolling interests and the cumulative effect of accounting changes) for each of the periods indicated is as follows:



	2018		2017		2016
Federal statutory rate	21.0	%	35.0	%	35.0	%
State income taxes, net of federal benefit	1.8		1.1		1.8
Non-U.S. income tax rate differential	5.3		(1.6	)	(3.6	)
Effect of tax law changes⁽¹⁾	(0.6	)	99.7		—
Basis difference in affiliates	(2.4	)	(2.1	)	(0.1	)
Tax advantaged investments	(2.0	)	(2.2	)	(2.4	)
Other, net	(0.3	)	(0.8	)	(0.7	)
Effective income tax rate	22.8	%	129.1	%	30.0	%


(1)	2018 includes one-time Tax Reform benefits of $94 million for amounts that were considered provisional pursuant to SAB 118. 2017 includes the one-time $22,594 million charge for Tax Reform.

Schedule of deferred tax assets and liabilities

Deferred income taxes at December 31 related to the following:



In millions of dollars	2018			2017
Deferred tax assets
Credit loss deduction	$	3,419		$	3,423
Deferred compensation and employee benefits	1,975			1,585
Repositioning and settlement reserves	428			454
U.S. tax on non-U.S. earnings	2,080			2,452
Investment and loan basis differences	4,891			3,384
Cash flow hedges	240			233
Tax credit and net operating loss carry-forwards	20,759			21,575
Fixed assets and leases	1,006			1,090
Other deferred tax assets	2,145			1,988
Gross deferred tax assets	$	36,943		$	36,184
Valuation allowance	$	9,258		$	9,387
Deferred tax assets after valuation allowance	$	27,685		$	26,797
Deferred tax liabilities
Intangibles	$	(975	)	$	(1,247	)
Debt issuances	(530		)	(294		)
Non-U.S. withholding taxes	(1,040		)	(668		)
Interest-related items	(594		)	(562		)
Other deferred tax liabilities	(1,643		)	(1,545		)
Gross deferred tax liabilities	$	(4,782	)	$	(4,316	)
Net deferred tax assets	$	22,903		$	22,481

Summary of unrecognized tax benefits

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



In millions of dollars	2018			2017			2016
Total unrecognized tax benefits at January 1	$	1,013		$	1,092		$	1,235
Net amount of increases for current year’s tax positions	40			43			34
Gross amount of increases for prior years’ tax positions	46			324			273
Gross amount of decreases for prior years’ tax positions	(174		)	(246		)	(225		)
Amounts of decreases relating to settlements	(283		)	(199		)	(174		)
Reductions due to lapse of statutes of limitation	(23		)	(11		)	(21		)
Foreign exchange, acquisitions and dispositions	(12		)	10			(30		)
Total unrecognized tax benefits at December 31	$	607		$	1,013		$	1,092

Schedule of income tax penalties and interest accrued

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



	2018				2017				2016
In millions of dollars	Pretax		Net of tax		Pretax		Net of tax		Pretax		Net of tax
Total interest and penalties on the Consolidated Balance Sheet at January 1	$	121	$	101	$	260	$	164	$	233	$	146
Total interest and penalties in the Consolidated Statement of Income	6		6		5		21		105		68
Total interest and penalties on the Consolidated Balance Sheet at December 31⁽¹⁾	103		85		121		101		260		164


(1)	Includes $2 million, $3 million and $3 million for non-U.S. penalties in 2018, 2017 and 2016. Also includes $1 million, $3 million and $3 million for state penalties in 2018, 2017 and 2016.

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	2013
New York State and City	2009
United Kingdom	2015
India	2015
Singapore	2011
Hong Kong	2012
Ireland	2014

Schedule of deferred tax assets and liabilities by jurisdiction

The following table summarizes Citi’s DTAs:



In billions of dollars
Jurisdiction/component⁽¹⁾	DTAs balance December 31, 2018		DTAs balance December 31, 2017
U.S. federal⁽²⁾
Net operating losses (NOLs)⁽³⁾	$	2.6	$	2.3
Foreign tax credits (FTCs)	6.8		7.6
General business credits (GBCs)	1.0		1.4
Future tax deductions and credits	6.7		4.8
Total U.S. federal	$	17.1	$	16.1
State and local
New York NOLs	$	2.0	$	2.3
Other state NOLs	0.2		0.2
Future tax deductions	1.4		1.3
Total state and local	$	3.6	$	3.8
Non-U.S.
NOLs	$	0.6	$	0.6
Future tax deductions	1.6		2.0
Total non-U.S.	$	2.2	$	2.6
Total	$	22.9	$	22.5


(1)	All amounts are net of valuation allowances.


(2)	Included in the net U.S. federal DTAs of $17.1 billion as of December 31, 2018 were deferred tax liabilities of $2.8 billion that will reverse in the relevant carry-forward period and may be used to support the DTAs.


(3)	Consists of non-consolidated tax return NOL 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, 2018		December 31, 2017
U.S. tax return foreign tax credit carry-forwards⁽¹⁾
2018	$	—	$	0.4
2019	0.9		1.3
2020	2.6		3.2
2021	1.8		2.0
2022	3.3		3.4
2023⁽²⁾	0.4		0.4
2025⁽²⁾	1.4		1.4
2027⁽²⁾	1.1		1.2
2028	1.3		—
Total U.S. tax return foreign tax credit carry-forwards	$	12.8	$	13.3
U.S. tax return general business credit carry-forwards
2032	$	—	$	0.2
2033	—		0.3
2034	—		0.2
2035	—		0.2
2036	0.1		0.2
2037	0.4		0.3
2038	0.5		—
Total U.S. tax return general business credit carry-forwards	$	1.0	$	1.4
U.S. subsidiary separate federal NOL carry-forwards
2027	$	0.2	$	0.2
2028	0.1		0.1
2030	0.3		0.3
2032	0.1		0.1
2033	1.6		1.6
2034	2.1		2.3
2035	3.3		3.3
2036	2.1		2.1
2037	1.0		1.0
Unlimited carry-forward period	1.7		—
Total U.S. subsidiary separate federal NOL carry-forwards⁽³⁾	$	12.5	$	11.0
New York State NOL carry-forwards⁽³⁾
2034	$	11.7	$	13.6
New York City NOL carry-forwards⁽³⁾
2034	$	11.5	$	13.1
Non-U.S. NOL carry-forwards⁽¹⁾
Various	$	2.0	$	2.0


(1)	Before valuation allowance.


(2)	The $2.9 billion in FTC carry-forwards that expire in 2023, 2025 and 2027 are in a non-consolidated tax return entity but will be utilized (net of valuation allowances) in Citigroup’s consolidated tax return.


(3)	Pretax.