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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME T AXES The components of income tax expense from continuing operations are as follows: Table 103: Components of Income Tax Expense
Year ended December 31 In millions | 2020 |  | 2019 |  | 2018 |
Current |  |  |  |  |  |
Federal | $ | 669 |  |  | $ | 570 |  |  | $ | 739 |  |
State | 158 |  |  | 152 |  |  | 178 |  |
Total current | $ | 827 |  |  | $ | 722 |  |  | $ | 917 |  |
Deferred |  |  |  |  |  |
Federal | (373) |  |  | 187 |  |  | 13 |  |
State | (28) |  |  | (8) |  |  | (2) |  |
Total deferred | $ | (401) |  |  | $ | 179 |  |  | $ | 11 |  |
Total | $ | 426 |  |  | $ | 901 |  |  | $ | 928 |  |
Significant components of deferred tax assets and liabilities are as follows: Table 104: Deferred Tax Assets and Liabilities
December 31 – in millions | 2020 |  | 2019 |
Deferred tax assets |  |  |  |
Allowance for loan and lease losses | $ | 1,288 |  |  | $ | 661 |  |
Allowance for unfunded commitments | 141 |  |  | 78 |  |
Compensation and benefits | 227 |  |  | 270 |  |
Partnership investments | 121 |  |  | 120 |  |
Loss and credit carryforward | 162 |  |  | 203 |  |
Accrued expenses | 107 |  |  | 117 |  |
Lease obligations | 528 |  |  | 545 |  |
Other | 163 |  |  | 161 |  |
Total gross deferred tax assets | 2,737 |  |  | 2,155 |  |
Valuation allowance | (26) |  |  | (31) |  |
Total deferred tax assets | 2,711 |  |  | 2,124 |  |
Deferred tax liabilities |  |  |  |
Leasing | 1,179 |  |  | 1,183 |  |
Right of Use Assets | 476 |  |  | 520 |  |
Goodwill and intangibles | 193 |  |  | 194 |  |
Fixed assets | 592 |  |  | 412 |  |
Net unrealized gains on securities and financial instruments | 929 |  |  | 370 |  |
Other | 143 |  |  | 306 |  |
Total deferred tax liabilities | 3,512 |  |  | 2,985 |  |
Net deferred tax liability | $ | 801 |  |  | $ | 861 |  |
A reconciliation between the statutory and effective tax rates from continuing operations follows: Table 105: Reconciliation of Statutory and Effective Tax Rates
Year ended December 31 | 2020 |  | 2019 |  | 2018
Statutory tax rate | 21.0 | % |  | 21.0 | % |  | 21.0 | %
Increases (decreases) resulting from: |  |  |  |  |
State taxes net of federal benefit | 2.0 |  |  | 2.3 |  |  | 2.5 |
Tax-exempt interest | (1.7) |  |  | (1.5) |  |  | (1.7) |
Life insurance | (1.6) |  |  | (1.0) |  |  | (1.0) |
Tax credits | (6.0) |  |  | (4.2) |  |  | (4.0) |
Federal deferred tax revaluation |  |  |  |  | (2.1) |
Unrecognized tax benefits | (1.6) |  |  | (0.1) |  |  | 1.3 |
Subsidiary Liquidation | (1.2) |  |  |  |  |
Other | 1.5 |  |  | (0.1) |  |  | 0.9 |
Effective tax rate | 12.4 | % |  | 16.4 | % |  | 16.9 | %
The net operating loss carryforwards at December 31, 2020 and 2019 follow: Table 106: Net Operating Loss Carryforwards
Dollars in millions | December 31, 2020 |  | December 31, 2019 |  | Expiration |
Net Operating Loss Carryforwards: |  |  |  |  |  |
Federal | $ | 282 |  |  | $ | 402 |  |  | 2032 |
State | $ | 848 |  |  | $ | 1,197 |  |  | 2021-2039 |
The majority of the tax credit carryforwards expire in 2039 and were $58 million at December 31, 2020 and $149 million at December 31, 2019. Some federal and state net operating loss and credit carryforwards are from acquired entities and utilization is subject to various statutory limitations. We anticipate that we will be able to fully utilize our carryforwards for federal tax purposes, but we have recorded an insignificant valuation allowance against certain state tax carryforwards as of December 31, 2020. Retained earnings included $0.1 billion at both December 31, 2020 and 2019 in allocations for bad debt deductions of former thrift subsidiaries for which no income tax has been provided. Under current law, if certain subsidiaries use these bad debt reserves for purposes other than to absorb bad debt losses, they will be subject to Federal income tax at the current corporate tax rate. A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows: Table 107: Change in Unrecognized Tax Benefits
In millions | 2020 |  | 2019 |  | 2018 |
Balance of gross unrecognized tax benefits at January 1 | $ | 130 |  |  | $ | 207 |  |  | $ | 18 |  |
Increases: |  |  |  |  |  |
Positions taken during a current period | 265 |  |  |  |  |
Positions taken during a prior period |  |  |  |  | 212 |  |
Decreases: |  |  |  |  |  |
Positions taken during a prior period |  |  | (77) |  |  | (16) |  |
Settlements with taxing authorities | (130) |  |  |  |  | (7) |  |
Balance of gross unrecognized tax benefits at December 31 | $ | 265 |  |  | $ | 130 |  |  | $ | 207 |  |
Favorable impact if recognized | $ | 209 |  |  | $ | 76 |  |  | $ | 76 |  |
We do not expect that the balance of unrecognized tax benefits will increase or decrease in the next twelve months. We are subject to U.S. federal income tax as well as income tax in most states and some foreign jurisdictions. Table 108 summarizes the status of significant IRS examinations. Table 108: IRS Tax Examination Status
| Years under examination |  | Status at December 31 |
Federal | 2016 – 2018 |  | Under Exam |
In addition, we are under continuous examinations by various state taxing authorities. With few exceptions, we are no longer subject to state and local and foreign income tax examinations by taxing authorities for periods before 2013. For all open audits, any potential adjustments have been considered in establishing our unrecognized tax benefits as of December 31, 2020. Our policy is to classify interest and penalties associated with income taxes as income tax expense. For 2020 and 2019, the amount of gross interest and penalties was insignificant. At December 31, 2020 and 2019, the related amounts of accrued interest and penalties were also insignificant.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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