AIG 2011 Annual Report Download - page 370

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the year ended December 31, 2010, the effective tax rate on pre-tax income from continuing operations was
32.7 percent. The effective tax rate for the year ended December 31, 2010, attributable to continuing operations
differs from the statutory rate primarily due to tax benefits of $1.3 billion associated with AIG’s investment in
subsidiaries and partnerships, principally the AIA SPV which is treated as a partnership for U.S. tax purposes, and
$587 million associated with tax exempt interest, partially offset by an increase in the valuation allowance
attributable to continuing operations of $1.5 billion.
For the year ended December 31, 2009, the effective tax rate on pre-tax loss from continuing operations was
10.4 percent. The effective tax rate on the pre-tax loss from continuing operations for the year ended
December 31, 2009, differs from the statutory rate primarily due to increases in the valuation allowance of
$3.1 billion and reserve for uncertain tax positions of $874 million, partially offset by tax exempt interest of
$677 million and the change in investment in subsidiaries and partnerships of $473 million which was principally
related to changes in the estimated U.S. tax liability with respect to the potential sales of subsidiaries.
The following table presents the components of the net deferred tax assets (liabilities):
December 31,
(in millions) 2011 2010
Deferred tax assets:
Losses and tax credit carryforwards $ 28,223 $ 25,195
Unrealized loss on investments 2,436 3,223
Accruals not currently deductible, and other 6,431 3,036
Investments in foreign subsidiaries and joint ventures 1,432 2,207
Loss reserve discount 1,260 1,264
Loan loss and other reserves 877 1,093
Unearned premium reserve reduction 1,696 825
Employee benefits 1,217 1,034
Total deferred tax assets 43,572 37,877
Deferred tax liabilities:
Adjustment to life policy reserves (1,978) (458)
Deferred policy acquisition costs (5,087) (4,387)
Flight equipment, fixed assets and intangible assets (4,530) (4,753)
Unrealized gains related to available for sale debt securities (4,010) (3,317)
Other (378) (466)
Total deferred tax liabilities (15,983) (13,381)
Net deferred tax assets before valuation allowance 27,589 24,496
Valuation allowance (11,018) (25,773)
Net deferred tax assets (liabilities) $ 16,571 $ (1,277)
The following table presents AIG’s U.S. consolidated income tax group tax losses and credits carryforwards as of
December 31, 2011 on a tax return basis.
December 31, 2011 Tax Expiration
(in millions) Gross Effected Periods
Net operating loss carryforwards $ 45,273 $ 15,846 2028 - 2031
Capital loss carryforwards – Life 21,213 7,425 2013 - 2014
Capital loss carryforwards – Non-Life 88 30 2014 - 2015
Foreign tax credit carryforwards - 4,609 2016 - 2021
Other carryforwards and other - 496 Various
Total AIG U.S. consolidated income tax group tax losses and credits carryforwards $ 28,406
356 AIG 2011 Form 10-K