AIG 2007 Annual Report Download - page 249

American International Group, Inc. and Subsidiaries
21. Federal Income Taxes
Continued
The pretax components of U.S. and foreign income reflect the locations in which such pretax income was generated.
The pretax U.S. and foreign income was as follows for the years ended December 31, 2007, 2006 and 2005:
(in millions) 2007 2006 2005
U.S. $ (3,957) $ 9,862 $ 6,103
Foreign 12,900 11,825 9,110
Total $ 8,943 $21,687 $15,213
The provision for income taxes for the years ended December 31, 2007, 2006 and 2005 consists of the following:
Years Ended December 31,
(in millions) 2007 2006 2005
Foreign and U.S. components of actual income tax expense:
Foreign:
Current $ 3,157 $ 2,725 $ 974
Deferred 461 933 426
U.S.:
Current 62 2,764 1,613
Deferred (2,225) 115 1,245
Total $ 1,455 $ 6,537 $ 4,258
The U.S. federal income tax rate was 35 percent for 2007, 2006 and 2005. Actual tax expense on income differs from
the ‘‘expected’’ amount computed by applying the federal income tax rate because of the following:
2007 2006 2005
Percent Percent Percent
Years Ended December 31, of Pretax of Pretax of Pretax
(dollars in millions) Amount Income Amount Income Amount Income
U.S. federal income tax at statutory rate $3,130 35.0% $7,591 35.0% $5,325 35.0%
Adjustments:
Tax exempt interest (823) (9.2) (718) (3.3) (566) (3.7)
Partnerships and joint ventures (312) (3.5) (265) (1.2) (85) (0.5)
Synthetic fuel and other tax credits (127) (1.4) (196) (0.9) (296) (1.9)
Effect of foreign operations (294) (3.3)(132) (0.6) (253) (1.7)
Dividends received deduction (129) (1.4) (102) (0.5) (117) (0.8)
State income taxes 45 0.5 59 0.3 86 0.6
Nondeductible compensation 41 0.5 61 0.3 83 0.5
SICO benefit (194) (2.2) ————
Other 118 1.3 239 1.0 81 0.5
Actual income tax expense $1,455 16.3% $6,537 30.1% $4,258 28.0%
AIG 2007 Form 10-K 195