Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

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



	Year Ended December 31,
(Dollars in millions)	2016			2015			2014
Current income tax provision:
Federal taxes	$	2,087		$	1,991		$	1,934
State taxes	209			207			197
International taxes	104			73			91
Total current provision	$	2,400		$	2,271		$	2,222
Deferred income tax provision (benefit):
Federal taxes	$	(621	)	$	(368	)	$	(125	)
State taxes	(63		)	(39		)	22
International taxes	(2		)	5			27
Total deferred provision (benefit)	$	(686	)	$	(402	)	$	(76	)
Total income tax provision	$	1,714		$	1,869		$	2,146

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

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

Table 16.2: Income Tax Provision (Benefit) Reported in Stockholders’ Equity



	Year Ended December 31,
(Dollars in millions)	2016			2015			2014
Income tax provision recorded in AOCI⁽¹⁾	$	24		$	19		$	374
Income tax provision (benefit) recorded in additional paid in capital	33			(7		)	16
Foreign currency translation (gains) losses	(5		)	23			6
Total income tax provision recorded in stockholders’ equity	$	52		$	35		$	396

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⁽¹⁾	Income tax provision (benefit) recorded in AOCI 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, 2016, 2015 and 2014:

Table 16.3: Effective Income Tax Rate



	Year Ended December 31,
	2016		2015		2014
Income tax at U.S. federal statutory tax rate	35.0%		35.0%		35.0%
State taxes, net of federal benefit	1.9		1.9		1.8
Low-income housing, new markets and other tax credits	(4.9	)	(4.0	)	(3.0	)
Other foreign tax differences, net	0.3		(0.2	)	(0.6	)
Other, net	(1.0	)	(0.9	)	(0.5	)
Effective income tax rate	31.3%		31.8%		32.7%

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, 2016 and 2015:

Table 16.4: Significant Components of Deferred Tax Assets and Liabilities



(Dollars in millions)	December 31, 2016			December 31, 2015
Deferred tax assets:
Allowance for loan and lease losses	$	2,350		$	1,853
Rewards programs	1,348			1,192
Security and loan valuations	869			912
Goodwill and intangibles	294			245
Compensation and employee benefits	276			303
Representation and warranty reserve	234			226
Net operating loss and tax credit carryforwards	188			176
Unearned income	186			143
Net unrealized losses on derivatives	35			0
Other assets	270			329
Subtotal	6,050			5,379
Valuation allowance	(179		)	(166		)
Total deferred tax assets	5,871			5,213
Deferred tax liabilities:
Original issue discount	1,012			940
Fixed assets and leases	221			242
Net unrealized gains on derivatives	0			46
Other liabilities	328			323
Total deferred tax liabilities	1,561			1,551
Net deferred tax assets	$	4,310		$	3,662

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 16.5: 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
Additions for tax positions related to prior years	0			6			6
Reductions for tax positions related to prior years due to IRS and other settlements	(45		)	(15		)	(60		)
Balance as of December 31, 2016	$	85		$	24		$	109
Portion of balance at December 31, 2016 that, if recognized, would impact the effective income tax rate	$	55		$	16		$	71