Travelers 2007 Annual Report Download - page 216

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. INCOME TAXES
(for the year ended December 31, in millions) 2007 2006 2005
Composition of income tax expense (benefit) included in consolidated
statement of income
Current expense (benefit) on continuing operations:
Federal ................................................. $1,279 $ 943 $ (18)
Foreign ................................................. 103 64 46
State ................................................... 3920
Total current tax expense on continuing operations ................ 1,385 1,016 48
Deferred expense (benefit) on continuing operations:
Federal ................................................. 230 521 500
Foreign ................................................. —(20) 62
State ................................................... ———
Total deferred tax expense on continuing operations ............... 230 501 562
Tax expense on income from continuing operations ................... 1,615 1,517 610
Tax expense included in discontinued operations ..................... —— 851
Total income tax expense included in consolidated statement of income .... 1,615 1,517 1,461
Composition of income tax 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 ................................................. 47 (7) (333)
Total income tax expense included in consolidated financial statements ..... $1,662 $1,510 $1,128
Effective tax rate
Income from continuing operations before federal, foreign and state income
taxes ................................................... $6,216 $5,725 $2,671
Statutory tax rate ........................................... 35% 35% 35%
Expected federal income tax expense ............................. 2,176 2,004 935
Tax effect of:
Nontaxable investment income ................................ (465) (421) (371)
Foreign operations ......................................... (31) (50) 47
Other, net ............................................... (65) (16) (1)
Total income tax expense on income from continuing operations ......... $1,615 $1,517 $ 610
Effective tax rate on income from continuing operations ............... 26% 26% 23%
The current income tax payable was $176 million and $252 million at December 31, 2007 and 2006,
respectively, and is included in other liabilities in the consolidated balance sheet.
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