MetLife 2011 Annual Report Download - page 198

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
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 at:
December 31,
2011 2010
(In millions)
Deferred income tax assets: ...............................................................
Policyholder liabilities and receivables ...................................................... $ 5,939 $ 8,450
Net operating loss carryforwards ......................................................... 1,595 1,971
Employee benefits .................................................................... 916 664
Capital loss carryforwards ............................................................... 449 408
Tax credit carryforwards ................................................................ 1,692 1,007
Litigation-related and government mandated ................................................ 207 227
Other .............................................................................. 483 336
11,281 13,063
Less: Valuation allowance ............................................................... 1,083 932
10,198 12,131
Deferred income tax liabilities: .............................................................
Investments, including derivatives ......................................................... 3,371 2,261
Intangibles ........................................................................... 5,309 5,814
Net unrealized investment gains .......................................................... 4,355 1,490
DAC ............................................................................... 4,506 4,297
Other .............................................................................. 192 125
17,733 13,987
Net deferred income tax asset (liability) ................................................... $(7,535) $ (1,856)
The following table sets forth the domestic, state, and foreign net operating and capital loss carryforwards for tax purposes at December 31, 2011:
Net Operating Loss
Carryforwards Capital Loss Carryforwards
Amount Expiration Amount Expiration
(In millions) (In millions)
Domestic ....................................... $1,958 Beginning in 2018 $1,248 Beginning in 2013
State ........................................... $ 251 Beginning in 2012 $ — N/A
Foreign ......................................... $3,056 Beginning in 2015 $ 37 Beginning in 2014
Tax credit carryforwards of $1.7 billion at December 31, 2011 will expire beginning in 2016.
As of the Acquisition Date, the Company had established a valuation allowance of $671 million against the amount of U.S. deferred tax assets that
was expected to reverse post-branch restructuring of American Life. As of November 1, 2011 the Company finalized American Life’s current and
deferred income tax liabilities based upon the determination of the amount of taxes resulting from the Section 338 Election and the corresponding filing
of the income tax return. Accordingly, American Life’s current income tax receivable was increased by $12 million and deferred tax assets were reduced
by $2 million with a corresponding net decrease to goodwill. The Company also increased the valuation allowance recorded against U.S. deferred tax
assets to $720 million. The increase in the valuation allowance of $49 million, with a corresponding increase to goodwill, was a result of changes in
estimates and assumptions relating to the reversal of U.S. temporary differences prior to the completion of the anticipated restructuring of American
Life’s foreign branches and filing of the income tax return.
The Company also has recorded a valuation allowance increase related to tax benefits of $20 million related to certain state and foreign net
operating loss carryforwards, $1 million related to certain foreign unrealized losses, $86 million related to certain foreign other assets, and a decrease of
$5 million related to certain foreign capital loss carryforwards. 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 and capital loss carryforwards, certain state
net operating loss carryforwards, certain foreign unrealized losses and certain foreign other assets 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.
The Company has not provided U.S. deferred taxes on cumulative earnings of certain non-U.S. affiliates and associated companies that have been
reinvested indefinitely. These earnings relate to ongoing operations and have been reinvested in active non-U.S. business operations. The Company
does not intend to repatriate these earnings to fund U.S. operations. Deferred taxes are provided for earnings of non-U.S. affiliates and associated
companies when the Company plans to remit those earnings. At December 31, 2011 the Company had not made a provision for U.S. taxes on
approximately $1.7 billion of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially
permanent in duration. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries.
The Company files income tax returns with the U.S. federal government and various state and local jurisdictions, as well as foreign jurisdictions. The
Company is under continuous examination by the IRS and other tax authorities in jurisdictions in which the Company has significant business
194 MetLife, Inc.