MetLife 2012 Annual Report Download - page 199

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
The reconciliation of the income tax provision at the U.S. statutory rate to the provision for income tax as reported for continuing operations was as
follows:
Years Ended December 31,
2012 2011 2010
(In millions)
Tax provision at U.S. statutory rate ..................................................................... $505 $3,215 $1,306
Tax effect of:
Tax-exempt investment income ..................................................................... (256) (246) (242)
State and local income tax ......................................................................... (3) (4) 9
Prior year tax .................................................................................... 23 (4) 59
Tax credits ...................................................................................... (178) (138) (82)
Foreign tax rate differential .......................................................................... (45) (41) 37
Goodwill impairment .............................................................................. 408 — —
Deferred tax benefit of converting Japan branch to subsidiary .............................................. (324) — —
Change in valuation allowance ...................................................................... 15 16 7
Other, net ...................................................................................... (17) (5) 16
Provision for income tax expense (benefit) ........................................................... $128 $2,793 $1,110
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,
2012 2011
(In millions)
Deferred income tax assets:
Policyholder liabilities and receivables ...................................................................... $ 6,233 $ 5,939
Net operating loss carryforwards .......................................................................... 1,408 1,595
Employee benefits ..................................................................................... 1,234 916
Capital loss carryforwards ............................................................................... 160 449
Tax credit carryforwards ................................................................................ 545 1,692
Litigation-related and government mandated ................................................................ 197 207
Other ............................................................................................... 484 483
Total gross deferred income tax assets .................................................................. 10,261 11,281
Less: Valuation allowance ............................................................................... 368 1,083
Total net deferred income tax assets .................................................................... 9,893 10,198
Deferred income tax liabilities:
Investments, including derivatives ......................................................................... 3,149 3,371
Intangibles ........................................................................................... 2,668 5,309
Net unrealized investment gains .......................................................................... 7,854 4,453
DAC ............................................................................................... 4,775 3,268
Other ............................................................................................... 140 192
Total deferred income tax liabilities ...................................................................... 18,586 16,593
Net deferred income tax asset (liability) ................................................................... $(8,693) $ (6,395)
The following table sets forth the domestic, state, and foreign net operating and capital loss carryforwards for tax purposes at December 31, 2012.
Net Operating Loss
Carryforwards Capital Loss Carryforwards
Amount Expiration Amount Expiration
(In millions) (In millions)
Domestic ............................................... $3,249 Beginning in 2018 $405 Beginning in 2014
State .................................................. $ 453 Beginning in 2013 $ — N/A
Foreign ................................................ $1,438 Beginning in 2013 $ 52 Beginning in 2014
Tax credit carryforwards of $545 million at December 31, 2012 will expire beginning in 2017.
For U.S. federal income tax purposes, the Company made an election under Section 338 of the Code (the “Section 338 Election”) relating to the
acquisition of American Life. Pursuant to such election, the historical tax basis in the acquired assets and liabilities was adjusted to the fair market value
as of the ALICO Acquisition Date resulting in a change to the related deferred income taxes.
MetLife, Inc. 193