Aetna 2009 Annual Report Download - page 80

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13. Income Taxes
The components of our income tax provision in 2009, 2008 and 2007 were as follows:
(Millions) 2009 2008 2007
Current taxes:
Federal 657.4$ 744.6$ 742.1$
State 61.2 25.5 63.8
Total current taxes 718.6 770.1 805.9
Deferred taxes (benefits):
Federal (81.1) 19.4 161.0
State (12.8) .6 (1.5)
Total deferred income taxes (93.9) 20.0 159.5
Total income taxes 624.7$ 790.1$ 965.4$
Income taxes were different from the amount computed by applying the federal income tax rate to income before
income taxes as follows:
(Millions) 2009 2008 2007
Income before income taxes 1,901.2$ 2,174.2$ 2,796.4$
Tax rate 35% 35% 35%
Application of the tax rate 665.4 761.0 978.7
Tax effect of:
Valuation allowance (19.4) 56.0 -
Other, net (21.3) (26.9) (13.3)
Income taxes 624.7$ 790.1$ 965.4$
The significant components of our net deferred tax assets at December 31, 2009 and 2008 were as follows:
(Millions) 2009 2008
Deferred tax assets:
Reserve for anticipated future losses on discontinued products 194.4$ 262.7$
Employee and postretirement benefits 626.1 601.6
Investments, net 283.2 422.2
Deferred policy acquisition costs 51.4 56.5
Unrealized losses on investment securities - 128.2
Insurance reserves 157.5 27.2
Other 126.6 102.0
Gross deferred tax assets 1,439.2 1,600.4
Less: Valuation allowance 47.0 66.1
Deferred tax assets, net of valuation allowance 1,392.2 1,534.3
Deferred tax liabilities:
Unrealized gains on investment securities 194.9 -
Goodwill and other acquired intangible assets 256.8 244.0
Depreciation and amortization 223.7 210.1
Total gross deferred tax liabilities 675.4 454.1
Net deferred tax assets
(1)
716.8$ 1,080.2$
(1) Includes $383.4 million and $301.5 million classified as current assets at December 31, 2009 and 2008, respectively, and $333.4
million and $778.7 million classified as noncurrent assets at December 31, 2009 and 2008, respectively.
Valuation allowances are provided when we estimate that it is more likely than not that deferred tax assets will not be
realized. A valuation allowance has been established on certain federal and state net operating losses, as well as on a
portion of realized capital losses. We base our estimates of the future realization of deferred tax assets on historic and
anticipated taxable income. However, the amount of the deferred tax asset considered realizable could be adjusted in
the future if we revise our estimates of anticipated taxable income.
Annual Report – Page 74