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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

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 for the years ended December 31, 2020, 2019 and 2018.

Table 15.1: Significant Components of the Provision for Income Taxes Attributable to Continuing Operations

						Year Ended December 31,
(Dollars in millions)						2020						2019						2018
Current income tax provision:
Federal taxes						$	1,676					$	1,207					$	210
State taxes						370						301						234
International taxes						67						129						135
Total current provision						$	2,113					$	1,637					$	579
Deferred income tax provision (benefit):
Federal taxes						$	(1,357)					$	(222)					$	620
State taxes						(266)						(45)						115
International taxes						(4)						(29)						(21)
Total deferred provision (benefit)						(1,627)						(296)						714
Total income tax provision						$	486					$	1,341					$	1,293

Schedule of Effective Income Tax Rate

The following table presents the reconciliation of the U.S. federal statutory income tax rate to the effective income tax rate applicable to income from continuing operations for the years ended December 31, 2020, 2019 and 2018.

Table 15.2: Effective Income Tax Rate

						Year Ended December 31,
						2020						2019						2018
Income tax at U.S. federal statutory tax rate						21.0		%				21.0		%				21.0		%
State taxes, net of federal benefit						3.5						3.1						3.2
Non-deductible expenses						3.2						1.6						2.2
Affordable housing, new markets and other tax credits						(11.4)						(5.2)						(4.0)
Tax-exempt interest and other nontaxable income						(1.7)						(0.8)						(0.7)
IRS method changes						0.0						0.0						(3.9)
Changes in valuation allowance						2.3						(0.3)						0.3
Other, net						(1.7)						0.1						(0.4)
Effective income tax rate						15.2		%				19.5		%				17.7		%

Schedule of Significant Components of Deferred Tax Assets and Liabilities

The following table presents significant components of our deferred tax assets and liabilities as of December 31, 2020 and 2019. The valuation allowance below represents the adjustment of our foreign tax credit carryforward, certain state deferred tax assets and net operating loss carryforwards to the amount we have determined is more likely than not to be realized.

Table 15.3: Significant Components of Deferred Tax Assets and Liabilities

(Dollars in millions)						December 31, 2020						December 31, 2019
Deferred tax assets:
Allowance for credit losses						$	3,649					$	1,729
Rewards programs						711						579
Lease liabilities						396						407
Net operating loss and tax credit carryforwards						314						284
Compensation and employee benefits						306						301
Partnership investments						237						202
Unearned income						117						95
Goodwill and intangibles						116						161
Fixed assets and leases						42						0
Other assets						143						142
Subtotal						6,031						3,900
Valuation allowance						(296)						(223)
Total deferred tax assets						5,735						3,677
Deferred tax liabilities:
Security and loan valuations(1)						805						234
Original issue discount						481						600
Net unrealized gains on derivatives						387						93
Right-of-use assets						342						393
Partnership investments						142						147
Mortgage servicing rights						73						55
Loan fees and expenses						36						100
Fixed assets and leases						0						189
Other liabilities						143						146
Total deferred tax liabilities						2,409						1,957
Net deferred tax assets						$	3,326					$	1,720

_________

(1)Amount includes the tax impact of our December 31, 2019 transfer of our entire portfolio of held to maturity securities to available for sale.

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 15.4: 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, 2018						$	86					$	29					$	115
Additions for tax positions related to the current year						28						0						28
Additions for tax positions related to prior years						402						25						427
Reductions for tax positions related to prior years due to IRS and other settlements						(76)						(19)						(95)
Balance as of December 31, 2018						440						35						475
Additions for tax positions related to the current year						23						17						40
Additions for tax positions related to prior years						12						4						16
Reductions for tax positions related to prior years due to IRS and other settlements						(44)						(25)						(69)
Balance as of December 31, 2019						431						31						462
Additions for tax positions related to the current year						33						0						33
Additions for tax positions related to prior years						3						21						24
Reductions for tax positions related to prior years due to IRS and other settlements						(16)						(6)						(22)
Balance as of December 31, 2020						$	451					$	46					$	497
Portion of balance at December 31, 2020 that, if recognized, would impact the effective income tax rate						$	153					$	35					$	188

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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