MetLife 2008 Annual Report Download - page 193

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:
2008 2007 2006
Years Ended December 31,
(In millions)
TaxprovisionatU.S.statutoryrate..................................... $1,781 $2,017 $1,374
Tax effect of:
Tax-exemptinvestmentincome...................................... (254) (296) (296)
Stateandlocalincometax......................................... 2 39 23
Prioryeartax ................................................. 53 70 (10)
Foreigntaxratedifferentialandchangeinvaluationallowance.................. 5 (116) (55)
Other,net.................................................... (7) (54) (20)
Provisionforincometax............................................ $1,580 $1,660 $1,016
Deferred income tax represents the tax effect of the differences between the book and tax basis of assets and liabilities. Net deferred
income tax assets and liabilities consisted of the following:
2008 2007
December 31,
(In millions)
Deferred income tax assets:
Policyholderliabilitiesandreceivables....................................... $ 5,553 $4,092
Netoperatinglosscarryforwards .......................................... 741 595
Employeebenefits.................................................... 657 134
Capitallosscarryforwards............................................... 273 158
Taxcreditcarryforwards................................................ 348 20
Netunrealizedinvestmentlosses.......................................... 6,590 —
Litigation-relatedandgovernmentmandated................................... 284 113
Other............................................................ 242 395
14,688 5,507
Less:Valuationallowance............................................... 272 127
14,416 5,380
Deferred income tax liabilities:
Investments,includingderivatives.......................................... 5,299 2,135
Intangibles......................................................... 156 32
DAC............................................................. 3,939 4,177
Netunrealizedinvestmentgains........................................... — 423
Other............................................................ 95 115
9,489 6,882
Netdeferredincometaxasset/(liability)........................................ $ 4,927 $(1,502)
Domestic net operating loss carryforwards amount to $1,588 million at December 31, 2008 and will expire beginning in 2020. Foreign
net operating loss carryforwards amount to $693 million at December 31, 2008 and were generated in various foreign countries with
expiration periods of five years to indefinite expiration. Capital loss carryforwards amount to $781 million at December 31, 2008 and will
expire beginning in 2010. Tax credit carryforwards amount to $348 million at December 31, 2008.
The Company has recorded a valuation allowance related to tax benefits of certain foreign net operating loss carryforwards and certain
foreign unrealized losses. The valuation allowance reflects management’s assessment, based on available information, that it is more likely
than not that the deferred income tax asset for certain foreign net operating loss carryforwards and certain foreign unrealized losses will not
be realized. The tax benefit will be recognized when management believes that it is more likely than not that these deferred income tax
assets are realizable. In 2008, the Company recorded an increase to the deferred tax valuation allowance of $145 million, of which
$63 million related to certain foreign net operating loss carryforwards and $82 million related to certain foreign unrealized losses.
The Company has not established a valuation allowance against the deferred tax asset of $6,590 million recognized in connection with
unrealized losses at December 31, 2008, other than the $82 million of valuation allowance recognized in connection with certain foreign
unrealized losses. A valuation allowance was not considered necessary based upon the Company’s intent and ability to hold such
securities until their recovery or maturity and the existence of tax-planning strategies that include sources of future taxable income against
which such losses could be offset.
F-70 MetLife, Inc.
MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)