Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Components of Income Tax Expense (Benefit)

The following table presents the components of income tax expense (benefit) for the periods indicated:



	Years Ended December 31,
(In millions)	2017			2016			2015
Current:
Federal	$	229		$	(14	)	$	52
State	18			30			92
Non-U.S.	380			320			342
Total current expense	627			336			486
Deferred:
Federal	49			(311		)	(39		)
State	65			38			40
Non-U.S.	(19		)	(85		)	(169		)
Total deferred expense (benefit)	95			(358		)	(168		)
Total income tax expense (benefit)	$	722		$	(22	)	$	318

Schedule of Effective Income Tax Rate Reconciliation

The following table presents a reconciliation of the U.S. statutory income tax rate to our effective tax rate based on income before income tax expense for the periods indicated:



	Years Ended December 31,
	2017		2016		2015
U.S. federal income tax rate	35.0	%	35.0	%	35.0	%
Changes from statutory rate:
State taxes, net of federal benefit	1.9		2.0		4.2
Tax-exempt income	(4.5	)	(6.1	)	(5.6	)
Business tax credits⁽¹⁾	(6.8	)	(13.6	)	(9.4	)
Foreign tax differential	(7.4	)	(7.7	)	(9.6	)
Transition tax	15.7		—		—
Deferred tax revaluation	(6.8	)	—		—
Foreign designated earnings	(0.7	)	(6.8	)	—
Foreign capital transactions	—		(4.3	)	—
Tax refund	—		—		(2.8	)
Litigation expense	—		1.4		2.7
Other, net	(1.5	)	(0.9	)	(0.7	)
Effective tax rate	24.9	%	(1.0	)%	13.8	%

⁽¹⁾ Business tax credits include low-income housing, production and investment tax credits.

Schedule of Deferred Tax Assets and Liabilities

The following table presents significant components of our gross deferred tax assets and gross deferred tax liabilities as of the dates indicated:



	December 31,
(In millions)	2017			2016
Deferred tax assets:
Unrealized losses on investment securities, net	$	17		$	157
Deferred compensation	159			285
Defined benefit pension plan	82			116
Restructuring charges and other reserves	132			199
Foreign currency translation	18			225
General business credit	231			425
NOL and other carryforwards	101			73
Other	27			32
Total deferred tax assets	767			1,512
Valuation allowance for deferred tax assets	(88		)	(66		)
Deferred tax assets, net of valuation allowance	$	679		$	1,446
Deferred tax liabilities:
Leveraged lease financing	$	184		$	313
Fixed and intangible assets	755			886
Non-U.S. earnings	6			164
Investment basis differences	158			120
Total deferred tax liabilities	$	1,103		$	1,483

The reduction in deferred tax assets and liabilities includes the provisional estimated impact of TCJA as well as current year activity such as the utilization of General Business Credits, additional investments in tax advantaged investments and changes in FX rates.

The table below summarizes the deferred tax assets and related valuation allowances recognized as of December 31, 2017:



(In millions)	Deferred Tax Asset		Valuation Allowance			Expiration
General business Credits	$	231	$	—		2035-2037
NOLs - Non-U.S.	47		(35		)	2018-2026 / None
Other Carryforwards	41		(41		)	None
NOLs - State	13		(12		)	2018-2036

Summary of Income Tax Contingencies

The following table presents activity related to unrecognized tax benefits as of the dates indicated:



	December 31,
(In millions)	2017			2016			2015
Beginning balance	$	71		$	63		$	163
Decrease related to agreements with tax authorities	(14		)	(13		)	(122		)
Increase related to tax positions taken during current year	26			7			8
Increase related to tax positions taken during prior years	11			14			14
Ending balance	$	94		$	71		$	63