AIG 2010 Annual Report Download - page 372

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table presents AIG’s U.S. consolidated income tax group tax losses and credits carryforwards as of
December 31, 2010 on a tax return basis.
December 31, 2010 Ta x
(in millions) Gross Effected Expiration Periods
Net operating loss carryforwards $32,281 $ 11,298 20 years/2028-2030
Capital loss carryforwards – Life 23,172 8,110 5 years/2013-2014
Capital loss carryforwards – Non-Life 4,633 1,621 5 years/2014-2015
Foreign tax credit carryforwards - 4,575 10 years/2015-2020
Other carryforwards and other - 424 various
Total AIG U.S. consolidated income tax group tax losses and credits
carryforwards $ 26,028
The following table provides a rollforward of the net deferred tax asset (liability) from December 31, 2009 to
December 31, 2010.
2010
Net Deferred Net
Tax Asset Before Deferred
Valuation Valuation Tax Asset
(in millions) Allowance Allowance (Liability)
Net deferred tax asset, beginning of year $ 29,589 $ (23,705) $ 5,884
Provision – continuing operations (4,018) (1,197) (5,215)
Benefit (provision) – discontinued operations 1(1,292) (1,291)
Deferred taxes on components of shareholders’ equity (2,490) (66) (2,556)
Deferred taxes of acquired entities 621 (693) (72)
Deferred taxes of deconsolidated entities 140 1,180 1,320
Net deferred tax liabilities reclassified as held for sale 653 - 653
Net deferred tax asset (liability), end of year $ 24,496 $ (25,773) $ (1,277)
Assessment of Deferred Tax Asset Valuation Allowances
AIG evaluates the recoverability of the deferred tax asset and establishes a valuation allowance, if necessary, to
reduce the deferred tax asset to an amount that is more likely than not to be realized (a likelihood of more than
50 percent). Significant judgment is required to determine whether a valuation allowance is necessary and the
amount of such valuation allowance, if appropriate.
When assessing the realization of its deferred tax asset, AIG considers all available evidence, including:
• the nature, frequency, and severity of cumulative financial reporting losses in recent years;
• the carryforward periods for the net operating loss, capital loss and foreign tax credit carryforwards;
• predictability of future operating profitability of the character necessary to realize the asset;
• certain transactions, including the recognition of the gains and losses on dispositions;
• prudent and feasible tax planning strategies that would be implemented, if necessary, to protect against the
loss of the deferred tax asset; and
• the effect of reversing taxable temporary differences.
The evaluation of the recoverability of the deferred tax asset requires AIG to weigh all positive and negative
evidence to reach a conclusion that it is more likely than not that all or some portion of the deferred tax assets
will not be realized. The weight given to the evidence is commensurate with the extent to which it can be
objectively verified. The more negative evidence that exists, the more positive evidence is necessary and the more
difficult it is to support a conclusion that a valuation allowance is not needed. As part of the evaluation at
356 AIG 2010 Form 10-K