Travelers 2004 Annual Report Download - page 176

THE ST. PAUL TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
11. FEDERAL INCOME TAXES
(for the year ended December 31, in millions) 2004 2003 2002
Composition of income tax expense (benefit) included in consolidated statement
of income (loss)
Current expense (benefit):
Federal ........................................................... $ 338 $ (7) $ 109
Foreign ........................................................... 26 53
State ............................................................. 14 ——
Total current tax expense (benefit) ................................. 378 (2) 112
Deferred expense (benefit):
Federal ........................................................... (275) 539 (589)
Foreign ........................................................... 34 ——
State ............................................................. 1——
Total deferred tax expense (benefit) ................................ (240) 539 (589)
Tax expense (benefit) on income (loss) before minority interest and cumulative effect
of change in accounting principles ....................................... 138 537 (477)
Tax benefit on cumulative effect of change in accounting principles ............... —— (26)
Total income tax expense (benefit) included in consolidated statement of income
(loss) ............................................................... $ 138 $ 537 $(503)
Composition of income tax expense (benefit) included in common shareholders’
equity
Expense (benefit) relating to stock-based compensation, the change in unrealized
appreciation on investments, unrealized loss on foreign exchange and unrealized
loss on derivatives, and other comprehensive income ......................... $ (117) $ 234 $ 225
Total income tax expense (benefit) included in consolidated financial statements ..... $21$ 771 $(278)
Effective tax rate
Income (loss) before federal, foreign and state income taxes, minority interest and
cumulative effect of change in accounting principles ......................... $1,128 $2,229 $(260)
Statutory tax rate ....................................................... 35% 35% 35%
Expected federal income tax expense (benefit) ................................ 395 780 (91)
Tax effect of:
Nontaxable investment income ........................................ (284) (201) (180)
Recoveries under Citigroup Indemnification Agreement .................... —— (182)
Tax reserve adjustment .............................................. 6(40) (23)
Foreign operations .................................................. 34 ——
Other, net ......................................................... (13) (2) (1)
Total income tax expense (benefit) on income (loss) before minority interest and
cumulative effect of change in accounting principles ......................... $ 138 $ 537 $(477)
Effective tax rate on income before minority interest and cumulative effect of change
in accounting principles ................................................ 12% 24% (183)%
The current income tax payable was $188 million and $226 million at December 31, 2004 and 2003,
respectively and is included in other liabilities in the consolidated balance sheet.
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