AIG 2011 Annual Report Download - page 369

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the income tax expense (benefit) attributable to pre-tax income (loss) from
continuing operations:
Years Ended December 31,
(in millions) 2011 2010 2009
Foreign and U.S. components of actual income tax expense:
Foreign:
Current $ 303 $ 807 $ 1,573
Deferred 100 318 3,661
U.S.:
Current (208) (163) 1,229
Deferred (18,231) 4,897 (7,952)
Total $ (18,036) $ 5,859 $ (1,489)
AIG’s actual income tax (benefit) expense differs from the statutory U.S. federal amount computed by applying
the federal income tax rate due to the following:
2011 2010 2009
Percent of Percent of
Pre-Tax Tax Pre-Tax Pre-Tax Tax Pre-Tax Tax Percent of
Years Ended December 31, Income Expense/ Income Income Expense/ Income Pre-Tax Expense/ Pre-Tax
(dollars in millions) (Loss) (Benefit) (Loss) (Loss) (Benefit) (Loss) (Loss) (Benefit) (Loss)
U.S. federal income tax at
statutory rate $ 1,007 $ 352 35.0% $ 17,711 $ 6,199 35.0% $ (15,423) $ (5,398) 35.0%
Adjustments:
Tax exempt interest (454) (45.1) (587) (3.3) (677) 4.4
Investment in subsidiaries and
partnerships (224) (22.2) (1,320) (7.5) (473) 3.1
Variable interest entities (43) (4.3) (2) (0.0) 435 (2.8)
Uncertain tax positions (25) (2.5) (37) (0.2) 874 (5.7)
Dividends received deduction (52) (5.2) (108) (0.6) (117) 0.8
Effect of foreign operations (346) (34.4) 206 1.2 (130) 0.8
Bargain purchase gain -- (116) (0.7) - -
State income taxes (87) (8.6) (126) (0.7) 155 (1.0)
Other 130 12.9 185 1.0 314 (2.0)
Effect of discontinued
operations (189) (18.8) (642) (3.6) (1,012) 6.6
Effect of discontinued
operations – goodwill -- 1,268 7.2 3 (0.0)
Valuation allowance:
Continuing operations (16,561) NM 1,486 8.4 3,137 (20.3)
Discontinued operations -- 1,292 7.3 (221) 1.4
Consolidated total amounts 1,007 (17,499) NM 17,711 7,698 43.5 (15,423) (3,110) 20.2
Amounts attributable to
discontinued operations 2,072 537 25.9 (225) 1,839 NM (1,116) (1,621) 145.3
Amounts attributable to continuing
operations $ (1,065) $ (18,036) NM% $ 17,936 $ 5,859 32.7% $ (14,307) $ (1,489) 10.4%
For the year ended December 31, 2011, the effective tax rate on pre-tax loss from continuing operations was not
meaningful, due to the significant effect of releasing approximately $16.6 billion of the deferred tax asset valuation
allowance. Other less significant factors that contributed to the difference from the statutory rate included tax
benefits of $454 million associated with tax exempt interest income, $346 million associated with the effect of
foreign operations, and $224 million associated with AIG’s investment in subsidiaries and partnerships
AIG 2011 Form 10-K 355