KeyBank 2015 Annual Report Download - page 199

partnerships because the general partners have the power to direct the activities that most significantly impact
their economic performance. Assets associated with these unconsolidated VIEs totaled $172 million at
December 31, 2015, and $188 million at December 31, 2014. These assets are recorded in “accrued income and
other assets,” “other investments,” “loans,” and “securities available for sale” on our balance sheet. Liabilities
associated with these unconsolidated VIEs totaled less than $1 million at both December 31, 2015, and
December 31, 2014, and are recorded in “accrued expenses and other liabilities” on our balance sheet.
Consolidated VIEs. Prior to 2004, KAHC formed limited partnership funds that invested in LIHTC operating
partnerships. Interests in these funds were offered in syndication to qualified investors who paid a fee to KAHC
for a guaranteed return. We also earned syndication fees from the guaranteed funds and continue to earn asset
management fees. While we have neither formed new guaranteed funds nor added LIHTC partnerships to the
existing funds since October 2003, we continue to act as asset manager and provide occasional funding to
existing funds under a guarantee obligation. As a result of this guarantee obligation, we have determined that we
are the primary beneficiary of these guaranteed funds and have consolidated them. The guaranteed funds’ assets
totaled $1 million at both December 31, 2015, and December 31, 2014, and can only be used to settle the funds’
obligations. The guaranteed funds liabilities totaled $1 million at both December 31, 2015, and December 31,
2014, and neither creditors nor equity investors in these funds have any recourse to our general credit.
Information regarding our maximum potential undiscounted future payments in connection with these guaranteed
funds is included in Note 20 (“Commitments, Contingent Liabilities and Guarantees”) under the heading “Return
guarantee agreement with LIHTC investors.”
Commercial and residential real estate investments and principal investments. Our Principal Investing unit
and the Real Estate Capital line of business make equity and mezzanine investments, some of which are in VIEs.
These investments are held by nonregistered investment companies subject to the provisions of the AICPA Audit
and Accounting Guide, “Audits of Investment Companies.” We currently are not applying the accounting or
disclosure provisions in the applicable accounting guidance for consolidations to these investments, which
remain unconsolidated. The FASB had previously deferred the effective date of this guidance for such
nonregistered investment companies. New accounting guidance was issued in February 2015 that removes this
deferral. The effective date for this guidance is January 1, 2016, for us. Additional information regarding this
new accounting guidance is provided in Note 1 (“Summary of Significant Accounting Policies”).
12. Income Taxes
Income taxes included in the income statement are summarized below. We file a consolidated federal income tax
return.
Year ended December 31,
in millions 2015 2014 2013
Currently payable:
Federal $ 337 $ 288 $ 216
State 42 33 26
Total currently payable 379 321 242
Deferred:
Federal (69) 16 39
State (7) (11) (10)
Total deferred (76) 529
Total income tax (benefit) expense (a) $ 303 $ 326 $ 271
(a) There was no income tax (benefit) expense on securities transactions in 2015 and 2014. The income tax (benefit) expense on securities
transactions totaled $1 million in 2013. Income tax expense excludes equity- and gross receipts-based taxes, which are assessed in lieu of
an income tax in certain states in which we operate. These taxes, which are recorded in “noninterest expense” on the income statement,
totaled $16 million in 2015, $17 million in 2014, and $23 million in 2013.
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