Net unrealized loss on available for sale securities

  
THE CHARLES SCHWAB CORPORATIONNotes to Consolidated Financial Statements(Tabular Amounts in Millions, Except Per Share Data, Option Price Amounts, Ratios, or as Noted)  
22.    Taxes on Income  
The components of taxes on income are as follows: 

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Year Ended December 31, | 2021 |  | 2020 |  | 2019 |
| Current: |   |  |   |  |   |
| Federal | $ | 1,507  |  |  | $ | 967  |  |  | $ | 958  |  |
| State | 298  |  |  | 172  |  |  | 184  |  |
| Total current | 1,805  |  |  | 1,139  |  |  | 1,142  |  |
| Deferred: |   |  |   |  |   |
| Federal | 38  |  |  | (113) |  |  | 3  |  |
| State | 15  |  |  | (25) |  |  | (1) |  |
| Total deferred | 53  |  |  | (138) |  |  | 2  |  |
| Taxes on income | $ | 1,858  |  |  | $ | 1,001  |  |  | $ | 1,144  |  |

  
The temporary differences that created deferred tax assets and liabilities are detailed below: 

|  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |
| December 31, | 2021 | 2020 |
| Deferred tax assets: |   |   |
| Net unrealized loss on available for sale securities | $ | 347  |  | $ | —  |  |
| Employee compensation, severance, and benefits | 237  |  | 271  |  |
| Operating lease liabilities | 225  |  | 249  |  |
| Reserves and allowances | 74  |  | 70  |  |
| Debt fair value remeasurement | 47  |  | 67  |  |
| State and local taxes | 40  |  | 37  |  |
| Net operating loss carryforwards | 8  |  | 8  |  |
|  |  |  |
| Total deferred tax assets | 978  |  | 702  |  |
| Valuation allowance | (8) |  | (8) |  |
| Deferred tax assets — net of valuation allowance | 970  |  | 694  |  |
| Deferred tax liabilities: |   |   |
| Amortization of acquired intangible assets | (1,888) |  | (1,954) |  |
| Net unrealized gain on available for sale securities | —  |  | (1,686) |  |
| Operating lease ROU assets | (210) |  | (233) |  |
| Capitalized internal-use software development costs | (142) |  | (101) |  |
|  |  |  |
|  |  |  |
| Other | (212) |  | (182) |  |
| Total deferred tax liabilities | (2,452) |  | (4,156) |  |
| Deferred tax asset/(liability) — net (1) | $ | (1,482) |  | $ | (3,462) |  |

(1) Amounts are included in accrued expenses and other liabilities on the consolidated balance sheets at December 31, 2021 and 2020.  
A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Year Ended December 31, | 2021 |  | 2020 |  | 2019 |
| Federal statutory income tax rate | 21.0  | % |  | 21.0  | % |  | 21.0  | % |
| State income taxes, net of federal tax benefit | 3.4  |  |  | 3.2  |  |  | 3.2  |  |
| Equity compensation benefit | (1.2) |  |  | (0.3) |  |  | (0.5) |  |
| Other | 0.9  |  |  | (0.6) |  |  | (0.1) |  |
| Effective income tax rate | 24.1  | % |  | 23.3  | % |  | 23.6  | % |

  
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