MetLife 2006 Annual Report Download - page 133

14. Income Tax
The provision for income tax from continuing operations is as follows:
2006 2005 2004
Years Ended December 31,
(In millions)
Current:
Federal ........................................................... $ 637 $ 559 $658
Stateandlocal ...................................................... 39 63 51
Foreign ........................................................... 156 111 154
Subtotal........................................................... 832 733 863
Deferred:
Federal ........................................................... $ 220 $ 470 $191
Stateandlocal ...................................................... 2 14 6
Foreign ........................................................... 62 11 (64)
Subtotal........................................................... 284 495 133
Provisionforincometax.................................................. $1,116 $1,228 $996
The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported for continuing
operations is as follows:
2006 2005 2004
Years Ended December 31,
(In millions)
TaxprovisionatU.S.statutoryrate.......................................... $1,477 $1,507 $1,251
Tax effect of:
Tax-exemptinvestmentincome .......................................... (296) (169) (131)
Stateandlocalincometax ............................................. 23 35 37
Prioryeartax ...................................................... (33) (31) (105)
Foreignoperations,netofforeignincometax ................................. (34) (44) (36)
Foreignoperationsrepatriation........................................... — (27) —
Other,net ........................................................ (21) (43) (20)
Provisionforincometax ................................................ $1,116 $1,228 $ 996
Included in the 2005 total tax provision was a $27 million tax benefit related to the repatriation of foreign earnings pursuant to Internal
Revenue Code Section 965 for which a U.S. deferred tax position had previously been recorded.
The Company is under continuous examination by the Internal Revenue Service (“IRS”) and other tax authorities in jurisdictions in which
the Company has significant business operations. The income tax years under examination vary by jurisdiction. In 2004, the Company
recorded an adjustment of $91 million for the settlement of all federal income tax issues relating to the IRS’s audit of the Company’s tax
returns for the years 1997-1999. Such settlement is reflected in the current year tax expense as an adjustment to prior year tax. The
Company also received $22 million in interest on such settlements and incurred an $8 million tax expense on such settlement for a total
impact to net income of $105 million. The current IRS examination covers the years 2000-2002 and the Company expects it to be
completed in 2007. The Company regularly assesses the likelihood of additional assessments in each taxing jurisdiction resulting from
current and subsequent years’ examinations. Liabilities for income tax have been established for future income tax assessments when it is
probable there will be future assessments and the amount thereof can be reasonably estimated. Once established, liabilities for uncertain
tax positions are adjusted only when there is more information available or when an event occurs necessitating a change to the liabilities.
The Company believes that the resolution of income tax matters for open years will not have a material effect on its consolidated financial
statements although the resolution of income tax matters could impact the Company’s effective tax rate for a particular future period.
F-50 MetLife, Inc.
METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)