Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Taxes Included in Income Statement

Income taxes included in the income statement are summarized below. We file a consolidated federal income tax return.



Year ended December 31, in millions	2016			2015			2014
Currently payable:
Federal	$	149		$	337		$	288
State	19			42			33
Total currently payable	168			379			321
Deferred:
Federal	13			(69		)	16
State	(2		)	(7		)	(11		)
Total deferred	11			(76		)	5
Total income tax (benefit) expense ^(a)	$	179		$	303		$	326

(a)

There was no income tax (benefit) expense on securities transactions in 2016, 2015, and 2014. Income tax expense excludes equity- and gross receipts-based taxes, which are assessed in lieu of an income tax in certain states in which we operate. These taxes, which are recorded in “noninterest expense” on the income statement, totaled $18 million in 2016, $16 million in 2015, and $17 million in 2014.

Significant Components of Deferred Tax Assets and Liabilities Included in "Accrued Income and Other Assets" and "Accrued Expense and Other Liabilities"

Significant components of our deferred tax assets and liabilities included in “accrued income and other assets” and “accrued expense and other liabilities,” respectively, on the balance sheet, are as follows:



December 31, in millions	2016		2015
Allowance for loan and lease losses	$	373	$	327
Employee benefits	276		268
Net unrealized securities losses	146		48
Federal net operating losses and credits	130		88
Fair value adjustments	136		—
Non-tax accruals	150		81
State net operating losses and credits	15		5
Other	236		260
Gross deferred tax assets	1,462		1,077
Less: Valuation Allowance	26		—
Total deferred tax assets	1,436		1,077
Leasing transactions	728		651
Fair Value Adjustments	—		2
Other	101		125
Total deferred tax liabilities	829		778
Net deferred tax assets (liabilities) ^(a)	$	607	$	299


(a)	From continuing operations.

Total Income Tax Expense (Benefit) and Resulting Effective Tax Rate

The following table shows how our total income tax expense (benefit) and the resulting effective tax rate were derived:



Year ended December 31, dollars in millions	2016					2015					2014
Year ended December 31, dollars in millions	Amount			Rate		Amount			Rate		Amount			Rate
Income (loss) before income taxes times 35% statutory federal tax rate	$	339		35.0	%	$	428		35.0	%	$	445		35.0	%
Amortization of tax-advantaged investments	88			9.0		81			6.7		69			5.4
Foreign tax adjustments	1			.1		(1		)	(.1	)	10			.8
Tax-exempt interest income	(25		)	(2.6	)	(18		)	(1.5	)	(16		)	(1.3	)
Corporate-owned life insurance income	(44		)	(4.5	)	(45		)	(3.6	)	(41		)	(3.2	)
State income tax, net of federal tax benefit	11			1.1		22			1.8		15			1.1
Tax credits	(208		)	(21.3	)	(155		)	(12.7	)	(134		)	(10.5	)
Other	17			1.7		(9		)	(0.8	)	(22		)	(1.7	)
Total income tax expense (benefit)	$	179		18.5	%	$	303		24.8	%	$	326		25.6	%

Change in Liability for Unrecognized Tax Benefits

The change in our liability for unrecognized tax benefits is as follows:



Year ended December 31, in millions	2016			2015
Balance at beginning of year	$	12		$	6
Increase for other tax positions of prior years	10			7
Increase from Acquisitions	33			—
Decrease related to tax positions taken in prior years	(2		)	(1		)
Balance at end of year	$	53		$	12