Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of Significant Components of Provision for Income Taxes Attributable to Continuing Operations

The following table presents significant components of the provision for income taxes attributable to continuing operations:

Table 18.1: Significant Components of the Provision for Income Taxes Attributable to Continuing Operations



	Year Ended December 31,
(Dollars in millions)	2015			2014			2013
Current income tax provision:
Federal taxes	$	1,991		$	1,934		$	1,581
State taxes	207			197			194
International taxes	73			91			115
Total current provision	$	2,271		$	2,222		$	1,890
Deferred income tax (benefit) provision:
Federal taxes	$	(368	)	$	(125	)	$	284
State taxes	(39		)	22			46
International taxes	5			27			4
Total deferred (benefit) provision	$	(402	)	$	(76	)	$	334
Total income tax provision	$	1,869		$	2,146		$	2,224

Schedule of Income Tax Provision (Benefit) Reported in Stockholders' Equity

The following table presents the income tax provision (benefit) reported in stockholders’ equity:

Table 18.2: Income Tax Provision (Benefit) Reported in Stockholders’ Equity



	Year Ended December 31,
(Dollars in millions)	2015			2014		2013
Income tax provision (benefit) recorded in AOCI ⁽¹⁾	$	19		$	374	$	(978	)
Income tax (benefit) provision recorded in additional paid in capital	(7		)	16		(10		)
Foreign currency translation losses	23			6		5
Total income tax provision (benefit) recorded in stockholders’ equity	$	35		$	396	$	(983	)

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⁽¹⁾	Includes the impact from hedging instruments designated as net investment hedges.

Schedule of Effective Income Tax Rate

The following table presents the reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate applicable to income from continuing operations for the years ended December 31, 2015, 2014 and 2013:

Table 18.3: Effective Income Tax Rate



	Year Ended December 31,
(Dollars in millions)	2015		2014		2013
Income tax at U.S. federal statutory tax rate	35.0%		35.0%		35.0%
State taxes, net of federal benefit	1.9		1.8		2.1
Low-income housing, new markets and other tax credits	(4.0	)	(3.0	)	(2.5	)
Other foreign tax differences, net	(0.2	)	(0.6	)	(0.6	)
Other, net	(0.9	)	(0.5	)	(0.2	)
Effective tax rate	31.8%		32.7%		33.8%

Schedule of Significant Components of Deferred Tax Assets and Liabilities

The following table presents significant components of the Company’s deferred tax assets and liabilities at December 31, 2015 and 2014:

Table 18.4: Significant Components of Deferred Tax Assets and Liabilities



(Dollars in millions)	December 31, 2015			December 31, 2014
Deferred tax assets:
Allowance for loan and lease losses	$	1,853		$	1,574
Rewards programs	1,192			993
Security and loan valuations	912			928
Compensation and employee benefits	303			305
Goodwill and intangibles	245			140
Representation and warranty reserve	226			271
Net operating loss and tax credit carryforwards	176			163
Unearned income	143			100
Net unrealized losses on derivatives	0			41
Other assets	329			323
Subtotal	5,379			4,838
Valuation allowance	(166		)	(148		)
Total deferred tax assets	5,213			4,690
Deferred tax liabilities:
Original issue discount	940			875
Fixed assets and leases	242			208
Net unrealized gains on derivatives	46			0
Other liabilities	323			275
Total deferred tax liabilities	1,551			1,358
Net deferred tax assets	$	3,662		$	3,332

Schedule of Reconciliation of Change in Unrecognized Tax Benefits

The following table presents the accrued balance of tax, interest and penalties related to unrecognized tax benefits:

Table 18.5: Reconciliation of the Change in Unrecognized Tax Benefits



(Dollars in millions)	Gross Unrecognized Tax Benefits			Accrued Interest and Penalties			Gross Tax, Interest and Penalties
Balance as of January 1, 2014	$	114		$	39		$	153
Additions for tax positions related to prior years	9			2			11
Reductions for tax positions related to prior years due to IRS and other settlements	(16		)	(5		)	(21		)
Balance as of December 31, 2014	$	107		$	36		$	143
Additions for tax positions related to prior years	38			8			46
Reductions for tax positions related to prior years due to IRS and other settlements	(15		)	(11		)	(26		)
Balance as of December 31, 2015	$	130		$	33		$	163
Portion of balance at December 31, 2015 that, if recognized, would impact the effective income tax rate	$	85		$	21		$	106