Travelers 2006 Annual Report Download - page 214

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
202
10. INCOME TAXES
(for the year ended December 31, in millions) 2006 2005 2 004
Composition of income tax expense (benefit) included in consolidated
statement of income
Current expense (benefit) on continuing operations:
Federal.......................................................... $943 $(18 ) $283
Foreign. ......................................................... 64 46 26
State............................................................ 9 20 5
Total current tax expense on continuing operations ................. 1,016 48 314
Deferred expense (benefit) on continuing operations:
Federal.......................................................... 521 500 (280)
Foreign. ......................................................... (20 ) 62 34
State............................................................ — — 1
Total deferred tax expense (benefit) on continuing operations ........ 501
562 (245)
Tax expense on income from continuing operations ..................... 1,517
610 69
Tax expense included in discontinuedoperations....................... — 851 54
Total income tax expense included in consolidated statement of income ... 1,517
1,461 123
Composition of income tax benefit included in common shareholders’
equity
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 ........ (7 )(333 ) (117)
Total income tax expense included in consolidated financial statements.... $1,510
$ 1 ,128 $ 6
Effective tax rate
Income from continuing operations before federal, foreign and state
income taxes and minority interest.................................. $5,725 $2,671 $946
Statutory tax rate ................................................... 35% 35 % 35%
Expected federal income tax expense .................................. 2,004 935 331
Tax effect of:
Nontaxable investment income..................................... (421 )(371 ) (284)
Foreign operations. ............................................... (50 ) 47 34
Other, net ....................................................... (16 ) (1 ) (12)
Total income tax expense on income from continuing operations before
minority interest .................................................. $1,517 $ 610 $ 69
Effective tax rate on income from continuing operations before minority
interest .......................................................... 26% 23 % 7%
The current income tax payable was $252 million and$142 million at December 31, 2006 and 2005,
respectively, and is included in other liabilities in the consolidated balance sheet.