MetLife 2013 Annual Report Download - page 209

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
19. Income Tax (continued)
The following table provides a rollforward of the deferred tax asset valuation allowance associated with the 2013 branch restructurings:
Amount
(In millions)
Balance at January 1, 2012 ....................................................................................... $23
Income tax expense (benefit) ..................................................................................... 12
Deferred income tax expense (benefit) related to unrealized investment gains (losses) ......................................... (10)
Offsetting reduction in gross deferred tax asset related to the branch transfer of assets to foreign subsidies ........................ —
Balance at December 31, 2012 .................................................................................... 25
Income tax expense (benefit) ..................................................................................... 4
Deferred income tax expense (benefit) related to unrealized investment gains (losses) ......................................... 2
Offsetting reduction in gross deferred tax asset related to the branch transfer of assets to foreign subsidies ........................ (31)
Balance at December 31, 2013 .................................................................................... $—
See Note 3 for a discussion of branch restructuring in accordance with the Closing Agreement. In December 2012, the Tokyo District Court ruled in
favor of the Japan branch of American Life in a tax case related to the deduction of unrealized foreign exchange losses on certain securities held by
American Life prior to its acquisition by MetLife. During the first quarter of 2013, American Life received a refund of ¥16 billion ($176 million) related to
income tax, interest and penalties. Under the indemnification provisions of the stock purchase agreement dated March 7, 2010, as amended, by and
among MetLife, Inc., AIG and AM Holdings, MetLife, Inc. has remitted the refund to AIG, net of certain amounts it can retain as a counter claim. The
receipt of the refund, net of obligations to AIG with related foreign currency exchange impact and corresponding U.S. tax effects, resulted in a net
charge of $16 million in the consolidated statements of operations for the year ended December 31, 2013, which was comprised of a $154
million charge included in other expenses, a $19 million gain included in other net investment gains (losses) and a $119 million benefit included in
provision for income tax expense (benefit).
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, 2013, the Company had not made a provision for U.S. taxes on
approximately $3.3 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 considers the earnings of Japan, Argentina and the Middle East (excluding Turkey) to be available for repatriation. Earnings from the
remaining foreign countries are considered to be permanently reinvested. In 2013, the Company changed its repatriation assumptions related to certain
of its European operations and now considers these foreign earnings to be permanently reinvested.
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
operations. The income tax years under examination vary by jurisdiction and subsidiary. The Company is no longer subject to U.S. federal, state, or local
income tax examinations for years prior to 2003, except for 2000 through 2002 where the IRS has disallowed certain tax credits claimed and the
Company continues to protest. The IRS audit cycle for the years 2003 through 2006, which began in April 2010, is expected to conclude in 2014. In
material foreign jurisdictions, the Company is no longer subject to income tax examination for years prior to 2008.
The Company’s liability for unrecognized tax benefits may increase or decrease in the next 12 months. A reasonable estimate of the increase or
decrease cannot be made at this time. However, the Company continues to believe that the ultimate resolution of the pending issues will not result in a
material change to its consolidated financial statements, although the resolution of income tax matters could impact the Company’s effective tax rate for
a particular future period.
A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:
Years Ended December 31,
2013 2012 2011
(In millions)
Balance at January 1, ......................................................................... $708 $679 $ 810
Additions for tax positions of prior years ............................................................ 117 105 30
Reductions for tax positions of prior years .......................................................... (37) (82) (161)
Additions for tax positions of current year ........................................................... 39 32 13
Reductions for tax positions of current year ......................................................... (1) (9) (8)
Settlements with tax authorities .................................................................. (52) (15) (5)
Lapses of statutes of limitations .................................................................. — (2) —
Balance at December 31, ...................................................................... $774 $708 $ 679
Unrecognized tax benefits that, if recognized would impact the effective rate ............................... $661 $566 $ 527
MetLife, Inc. 201