Huntington Bancshares Incorporated Annual report pursuant to Section 13 and 15(d)

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2017

The following table provides a reconciliation of the beginning and ending amounts of gross unrecognized tax benefits:



(dollar amounts in millions)	2017		2016
Unrecognized tax benefits at beginning of year	$	24	$	23
Gross increases for tax positions taken during current period	—		1
Gross increases for tax positions taken during prior years	26		—
Unrecognized tax benefits at end of year	$	50	$	24

The following is a summary of the provision (benefit) for income taxes:



	Year Ended December 31,
(dollar amounts in millions)	2017			2016		2015
Current tax provision (benefit)
Federal	$	41		$	40	$	146
State	(1		)	3		6
Total current tax provision (benefit)	40			43		152
Deferred tax provision (benefit)
Federal	151			161		67
State	17			4		2
Total deferred tax provision (benefit)	168			165		69
Provision (benefit) for income taxes	$	208		$	208	$	221

The following is a reconciliation for provision for income taxes:



	Year Ended December 31,
(dollar amounts in millions)	2017			2016			2015
Provision for income taxes computed at the statutory rate	$	488		$	322		$	320
Increases (decreases):
Tax-exempt income	(31		)	(27		)	(21		)
Tax-exempt bank owned life insurance income	(23		)	(20		)	(18		)
General business credits	(71		)	(64		)	(48		)
Capital loss	(67		)	(46		)	(46		)
Impact from TCJA	(123		)	—			—
Affordable housing investment amortization, net of tax benefits	46			37			32
State income taxes, net	11			5			5
Stock based compensation	(13		)	(4		)	—
Other	(9		)	5			(3		)
Provision (benefit) for income taxes	$	208		$	208		$	221

The significant components of deferred tax assets and liabilities at December 31, were as follows:



	At December 31,
(dollar amounts in millions)	2017 (1)			2016 (2)
Deferred tax assets:
Allowances for credit losses	$	162		$	255
Tax credit carryforward	153			76
Fair value adjustments	142			217
Net operating and other loss carryforward	108			141
Accrued expense/prepaid	17			64
Market discount	10			8
Pension and other employee benefits	—			35
Partnership investments	7			23
Other assets	6			11
Total deferred tax assets	605			830
Deferred tax liabilities:
Lease financing	249			325
Loan origination costs	116			138
Deferred dividend income	77			—
Purchase accounting adjustments	68			74
Operating assets	53			54
Mortgage servicing rights	39			51
Securities adjustments	6			56
Pension and other employee benefits	5			—
Other liabilities	18			9
Total deferred tax liabilities	631			707
Net deferred tax (liability) asset before valuation allowance	(26		)	123
Valuation allowance	(6		)	(5		)
Net deferred tax (liability) asset	$	(32	)	$	118


(1)	2017 balances reflect federal statutory tax rate 21%.


(2)	2016 balances reflect federal statutory tax rate 35%.