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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Disclosure Text Block Abstract |
Income Taxes | N OTE 21 I ncome T axes The components of income tax expense for the years ended December 31 included in the Consolidated Statements of Income were as follows:
(Millions) |  |  | 2015 |  |  | 2014 |  |  | 2013
Current income tax expense: |  |  |  |  |  |  |  |  |
| U.S. federal |  | $ | 2,107 |  | $ | 2,136 |  | $ | 1,730
| U.S. state and local |  |  | 335 |  |  | 264 |  |  | 288
| Non-U.S. |  |  | 416 |  |  | 412 |  |  | 514
|  | Total current income tax expense |  |  | 2,858 |  |  | 2,812 |  |  | 2,532
Deferred income tax expense (benefit): |  |  |  |  |  |  |  |  |
| U.S. federal |  |  | (23) |  |  | 352 |  |  | 113
| U.S. state and local |  |  | (5) |  |  | 39 |  |  | 4
| Non-U.S. |  |  | (55) |  |  | (97) |  |  | (120)
|  | Total deferred income tax expense |  |  | (83) |  |  | 294 |  |  | (3)
Total income tax expense |  | $ | 2,775 |  | $ | 3,106 |  | $ | 2,529
A reconciliation of the U.S. federal statutory rate of 35 percent to the Company’s actual income tax rate for the years ended December 31 on continuing operations was as follows:
|  |  |  | 2015 |  | 2014 |  | 2013 |
U.S. statutory federal income tax rate |  | 35.0 | % | 35.0 | % | 35.0 | %
(Decrease) increase in taxes resulting from: |  |  |  |  |  |  |
| Tax-exempt income |  | (1.7) |  | (1.5) |  | (1.6) |
| State and local income taxes, net of federal benefit |  | 2.8 |  | 2.7 |  | 3.1 |
| Non-U.S. subsidiaries earnings(a) |  | (1.8) |  | (2.2) |  | (2.8) |
| Tax settlements(b) |  | (0.2) |  | (0.5) |  | (1.9) |
| Non deductible expenses(c) |  | 0.9 |  | ― |  | ― |
| All other |  | ― |  | 1.0 |  | 0.3 |
|  | Actual tax rates(a) |  | 35.0 | % | 34.5 | % | 32.1 | %
Results for all years primarily included tax benefits associated with the undistributed earnings of certain non-U.S. subsidiaries that were deemed to be reinvested indefinitely. Relate s to the resolution of tax matters in various jurisdictions. Relates to the nondeductible portion of the EG goodwill impairment. The Company records a deferred income tax (benefit) provision when there are differences between assets and liabilities measured for financial reporting and for income tax return purposes. These temporary differences result in taxable or deductible amounts in future years and are measured using the tax rates and laws that will be in effect when such differences are expected to reverse. The significant components of deferred tax assets and liabili ties as of December 31 are reflected in the following table:
(Millions) |  |  | 2015 |  |  | 2014
Deferred tax assets: |  |  |  |  |  |
| Reserves not yet deducted for tax purposes |  | $ | 3,771 |  | $ | 3,926
| Employee compensation and benefits |  |  | 648 |  |  | 789
| Other |  |  | 520 |  |  | 266
|  | Gross deferred tax assets |  |  | 4,939 |  |  | 4,981
|  | Valuation allowance |  |  | (58) |  |  | (75)
|  | Deferred tax assets after valuation allowance |  |  | 4,881 |  |  | 4,906
Deferred tax liabilities: |  |  |  |  |  |
| Intangibles and fixed assets |  |  | 1,547 |  |  | 1,597
| Deferred revenue |  |  | 509 |  |  | 498
| Deferred interest |  |  | 323 |  |  | 350
| Asset securitization |  |  | ― |  |  | 162
| Investment in joint ventures |  |  | 231 |  |  | 223
| Other |  |  | 120 |  |  | 62
|  | Gross deferred tax liabilities |  |  | 2,730 |  |  | 2,892
Net deferred tax assets |  | $ | 2,151 |  | $ | 2,014
A valuation allowance is established when management determines that it is more likely than not that all or some portion of the benefit of the deferred tax assets will not be realized. The valuation allowances as of December 31, 2015 and 2014 are associated with net operating losses and other deferred tax assets in certain non-U.S. operations of the Company. Accumulated earnings of certain non-U.S. subsidiaries, which totaled approximately $9.9 billion as of December 31, 2015, are inten ded to be permanently reinvested outside the United States. The Company does not provide for federal income taxes on foreign earnings intended to be permanently reinvested outside the United States. Accordingly, federal taxes, which would have aggregated approximately $3.0 billion as of December 31, 2015, have not been provided on those earnings. Net income taxes paid by the Company during 2015, 2014 and 2013, were approximately $3.4 billion, $2.5 billion and $2.0 billion, respectiv ely. These amounts include estimated tax payments and cash settlements relating to prior tax years. The Company is subject to the income tax laws of the United States, its states and municipalities and those of the foreign jurisdictions in which the Company operat es. These tax laws are complex, and the manner in which they apply to the taxpayer’s facts is sometimes open to interpretation. Given these inherent complexities, the Company must make judgments in assessing the likelihood that a tax position will be susta ined upon examination by the taxing authorities based on the technical merits of the tax position. A tax position is recognized only when, based on management’s judgment regarding the application of income tax laws, it is more likely than not that the tax position will be sustained upon examination. The amount of benefit recognized for financial reporting purposes is based on management’s best judgment of the largest amount of benefit that is more likely than not to be realized on ultimate settlement with t he taxing authority given the facts, circumstances and information available at the reporting date. The Company adjusts the level of unrecognized tax benefits when there is new information available to assess the likelihood of the outcome. The Company is u nder continuous examination by the Internal Revenue Service (IRS) and tax authorities in other countries and states in which the Company has significant business operations. The tax years under examination and open for examination vary by jurisdiction. The IRS has completed its field examination of the Company’s federal tax returns for years through 2007; however, refund claims for certain years continue to be reviewed by the IRS. In addition, the Company is currently under examination by the IRS for the ye ars 2008 through 2011. The following table presents changes in unrecognized tax benefits:
(Millions) |  |  | 2015 |  |  | 2014 |  |  | 2013
Balance, January 1 |  | $ | 909 |  | $ | 1,044 |  | $ | 1,230
Increases: |  |  |  |  |  |  |  |  |
| Current year tax positions |  |  | 81 |  |  | 4 |  |  | 124
| Tax positions related to prior years |  |  | 177 |  |  | 111 |  |  | 176
Decreases: |  |  |  |  |  |  |  |  |
| Tax positions related to prior years |  |  | (256) |  |  | (181) |  |  | (371)
| Settlements with tax authorities |  |  | (15) |  |  | (67) |  |  | (94)
| Lapse of statute of limitations |  |  | (26) |  |  | (1) |  |  | (21)
| Effects of foreign currency translations |  |  | ― |  |  | (1) |  |  | ―
Balance, December 31 |  | $ | 870 |  | $ | 909 |  | $ | 1,044
Included in the unrecognized tax benefits of $0.9 billion, $0.9 billion and $1.0 billion for December 31, 2015, 2014 and 2013 are approximately $502 million, $412 million and $427 million, respectively that, if recognized, would favorably affect the effective tax rate in a future period. The Company believes it is reasonably possible that its unrecognized tax benefits could decrease within the next 12 months by as much as $231 million principally as a result of potential resolutions of prior years’ tax items with various taxing authorities. The prior years’ tax items include unreco gnized tax benefits relating to the deductibility of certain expenses or losses and the attribution of taxa ble income to a particular jurisdiction or jurisdictions. Of the $231 million of unrecognized tax benefits, approximately $21 million relates to amounts that, if recognized, would be recorded in shareholders’ equity and would not impact the C ompany’s results of operations or its effective tax rate. Interest and penalties relating to unrecognized tax benefits are reported in the income tax provision. For the year ended December 31, 2015, the Company recognized approximately $38 million in expen ses for interest and penalties. For the years ended December 31, 2014 and 2013, the Company recognized benefits of approximately, $19 million and $31 million, respectively, of interest and penalties. The Company has approximately $164 million and $126 mill ion accrued for the payment of interest and penalties as of December 31, 2015 and 2014, respectively.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 + Details
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