Comerica 2015 Annual Report Download - page 138

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Comerica Incorporated and Subsidiaries
F-100
A reconciliation of the beginning and ending amount of net unrecognized tax benefits follows:
(in millions) 2015 2014 2013
Balance at January 1 $14 $11$42
Increases as a result of tax positions taken during a prior period 83—
Decrease related to settlements with tax authorities —— (31)
Balance at December 31 $22 $14$11
The Corporation anticipates that it is reasonably possible that settlements with tax authorities will result in an $8 million
decrease in net unrecognized tax benefits within the next twelve months.
After consideration of the effect of the federal tax benefit available on unrecognized state tax benefits, the total amount
of unrecognized tax benefits that, if recognized, would affect the Corporation’s effective tax rate was approximately $4 million at
December 31, 2015 and $2 million at December 31, 2014.
The following tax years for significant jurisdictions remain subject to examination as of December 31, 2015:
Jurisdiction Tax Years
Federal 2010-2014
California 2003-2014
Based on current knowledge and probability assessment of various potential outcomes, the Corporation believes that
current tax reserves are adequate, and the amount of any potential incremental liability arising is not expected to have a material
adverse effect on the Corporation’s consolidated financial condition or results of operations. Probabilities and outcomes are reviewed
as events unfold, and adjustments to the reserves are made when necessary.
The principal components of deferred tax assets and liabilities were as follows:
(in millions)
December 31 2015 2014
Deferred tax assets:
Allowance for loan losses $ 223 $ 208
Deferred compensation 113 123
Loan purchase accounting adjustments 25
Deferred loan origination fees and costs 24 28
Other temporary differences, net 67 44
Total deferred tax asset before valuation allowance 429 408
Valuation allowance (3)—
Total deferred tax assets 426 408
Deferred tax liabilities:
Lease financing transactions (183)(206)
Defined benefit plans (32)(38)
Net unrealized gains on investment securities available-for-sale (5)(21)
Allowance for depreciation (7)(13)
Total deferred tax liabilities (227)(278)
Net deferred tax asset $ 199 $ 130
Included in deferred tax assets at December 31, 2015 were $5 million of state net operating loss carryforwards, which
expire between 2016 and 2026. The Corporation believes it is more likely than not that the benefit from certain of these state net
operating loss carryforwards will not be realized and, accordingly, established a valuation allowance of $3 million at December 31,
2015. There was no valuation allowance on deferred tax assets at December 31, 2014. The determination regarding valuation
allowances was based on available evidence of loss carryback capacity, projected future reversals of existing taxable temporary
differences and assumptions made regarding future events. For further information on the Corporation’s valuation policy for
deferred tax assets, refer to Note 1.