AIG 2008 Annual Report Download - page 317

The U.S. federal income tax rate was 35 percent for 2008, 2007 and 2006. Actual tax expense on income
loss differs from the statutory amount computed by applying the federal income tax rate because of the
following:
Amount
Percent
of Pretax
Income Amount
Percent
of Pretax
Income Amount
Percent
of Pretax
Income
2008 2007 2006
Years Ended December 31,
(Dollars in millions)
U.S. federal income tax (benefit) at statutory
rate ............................. $(38,066) 35.0% $3,130 35.0% $7,591 35.0%
Adjustments:
Valuation allowance ............... 20,673 (19.0)% —— ——
Effect of foreign operations ......... 5,189 (4.8)% (565) (6.3)% (132) (0.6)%
Uncertain tax positions............. 1,113 (1.0)% 622 7.0% — —
Goodwill ....................... 1,401 (1.3)% —— ——
Tax exempt interest ............... (843) 0.8% (823) (9.2)% (718) (3.3)%
Partnerships and joint ventures ....... 279 (0.3)% (312) (3.5)% (265) (1.2)%
Tax credits...................... (59) 0.1% (127) (1.4)% (196) (0.9)%
Dividends received deduction ........ (144) 0.1% (129) (1.4)% (102) (0.5)%
State income taxes ................ (63) 0.1% 45 0.5% 59 0.3%
SICO benefit .................... ——%(194) (2.2)% — —
Other.......................... 2,146 (2.0)% (192) (2.2)% 300 1.3%
Actual income tax expense (benefit) ...... $ (8,374) 7.7% $1,455 16.3% $6,537 30.1%
The components of the net deferred tax asset were as follows:
2008 2007
December 31,
(In millions)
Deferred tax assets:
Loss reserve discount ........................................ $ 2,105 $ 2,249
Unearned premium reserve reduction ............................. 1,179 1,743
Unrealized depreciation of investments ........................... 12,401 1,503
Unrealized (gains)/losses related to available for sale debt securities . ..... 3,649 —
Loan loss and other reserves ................................... 1,166 1,408
Investments in foreign subsidiaries and joint ventures................. —1,121
Adjustment to life policy reserves ............................... 3,226 3,213
NOL’s and tax attributes* ..................................... 25,632 1,814
Accruals not currently deductible, and other ....................... 2,617 1,305
Total deferred tax assets ........................................ 51,975 14,356
AIG 2008 Form 10-K 311
American International Group, Inc., and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)