Fifth Third Bank 2013 Annual Report Download - page 140

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
138 Fifth Third Bancorp
December 31, 2013 and 2012. Vantiv Holding, LLC did not draw upon its lines of credit during the years ended December 31, 2013
or 2012.
20. INCOME TAXES
The Bancorp and its subsidiaries file a consolidated federal income tax return. The following is a summary of applicable income taxes included in
the Consolidated Statements of Income for the years ended December 31:
($ in millions) 2013 2012 2011
Current income tax expense (benefit):
U.S. Federal income taxes $ 494 327 82
State and local income taxes 23 38 14
Foreign income taxes 2 - -
Total current tax expense 519 365 96
Deferred income tax expense
U.S. Federal income taxes 232 252 411
State and local income taxes 23 19 26
Foreign income taxes (2) - -
Total deferred income tax expense 253 271 437
A
pplicable income tax expense $ 772 636 533
The following is a reconciliation between the statutory U.S. Federal income tax rate and the Bancorp’s effective tax rate for the years ended
December 31:
($ in millions) 2013 2012 2011
Statutory tax rate 35.0 %35.0 35.0
Increase (decrease) resulting from:
State taxes, net of federal benefit 1.2 1.7 1.4
Tax-exempt income (1.1) (2.1) (1.4)
Credits (6.0) (6.7) (7.3)
Unrealized stock-based compensation benefits 0.3 0.8 1.3
Other, net 0.3 0.1 0.1
Effective tax rate 29.7 %28.8 29.1
Tax-exempt income in the rate reconciliation table includes interest
on municipal bonds, interest on tax-exempt lending,
income/charges on life insurance policies held by the Bancorp, and
certain gains on sales of leases that are exempt from federal
taxation.
The following table provides a summary of the Bancorp’s unrecognized tax benefits as of December 31:
($ in millions) 2013 2012
Tax positions that would impact the effective tax rate, if recognized $7 18
Tax positions where the ultimate deductibility is highly certain, but for which there is uncertainty about the timing of the deduction - -
Unrecognized tax benefits $7 18
The following table provides a reconciliation of the beginning and ending amounts of the Bancorp’s unrecognized tax benefits:
($ in millions) 2013 2012 2011
Unrecognized tax benefits at January 1 $ 18 14 16
Gross increases for tax positions taken during prior period 1 6 1
Gross decreases for tax positions taken during prior period (7) (3) (2)
Gross increases for tax positions taken during current period 1 2 -
Settlements with taxing authorities (5) - -
Lapse of applicable statute of limitations (1) (1) (1)
Unrecognized tax benefits at December 31 $ 7 18 14
The Bancorp’s unrecognized tax benefits as of December 31, 2013,
2012, and 2011 relate largely to state income tax exposures from
taking tax positions where the Bancorp believes it is likely that,
upon examination, a state will take a position contrary to the
position taken by the Bancorp.
While it is reasonably possible that the amount of the
unrecognized tax benefits with respect to certain of the Bancorp’s
uncertain tax positions could increase or decrease during the next 12
months, the Bancorp believes it is unlikely that its unrecognized tax
benefits will change by a material amount during the next 12
months.