AIG 2010 Annual Report Download - page 373

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2010, despite several favorable developments, including the completion of the Recapitalization in
January 2011, the wind-down of AIGFP’s portfolios, and the sale of AGF, AIG has recent negative evidence of
cumulative operating losses and a lack of predictable profits. Based on this evidence, AIG cannot assert that it is
more likely than not that any U.S. member deferred tax assets will be realized at December 31, 2010.
However, if in the future AIG demonstrates consistent profitability, ability to accurately project income by
jurisdiction and the resultant annual effective tax rate, or develops prudent and feasible tax planning strategies,
the evaluation of the recoverability of the deferred tax asset could change and the valuation allowance could be
released in whole or in part.
The following table presents the net deferred tax assets (liabilities) for December 31, 2010, and December 31,
2009, respectively, on a U.S. GAAP basis:
December 31,
(in millions) 2010 2009
Net U.S. consolidated return group deferred tax assets $ 26,563 $ 28,267
Net deferred tax assets in Other comprehensive income (2,901) 413
Valuation Allowance (23,840) (20,452)
Net U.S. consolidated return group deferred tax assets (178) 8,228
Net foreign, state & local deferred tax assets* 834 909
Valuation allowance (1,933) (3,253)
Net foreign, state & local deferred tax assets (1,099) (2,344)
Total AIG net deferred tax (liabilities) assets $ (1,277) $ 5,884
* Amount includes deferred tax liabilities for certain jurisdictions which are not available to offset deferred tax assets from other jurisdictions.
Deferred tax asset of U.S. consolidated income tax group
At December 31, 2009, AIG had a partial deferred tax asset valuation allowance of $20.4 billion as $8.2 billion
of the U.S. consolidated income tax group deferred tax asset was supported by gains expected to be realized from
the planned divestitures of businesses and assets, principally AIA and ALICO. All of these divestitures were
completed in 2010.
At December 31, 2010, and December 31, 2009, AIG’s U.S. consolidated income tax group had net deferred tax
liability after valuation allowance of $178 million and net deferred tax asset after valuation allowance of
$8.2 billion, respectively. At December 31, 2010, and December 31, 2009, AIG’s U.S. consolidated income tax
group had deferred tax asset valuation allowances of $23.9 billion and $20.4 billion, respectively.
For the year ended December 31, 2010, AIG recorded an increase in the U.S. consolidated income tax group
deferred tax asset valuation allowance of $3.4 billion. The increase in the deferred tax asset valuation allowance
was primarily attributable to a $1.8 billion increase in the deferred tax asset associated with operating losses
excluding divestiture gains that resulted in the realization of previously recognized deferred tax assets, $525 million
related to lower than expected realized value from the divestiture of AIA, $1.3 billion related to a reduction in the
estimated U.S. tax liability related to the investment in subsidiaries as a result of goodwill impairment charges, a
$533 million increase in the deferred tax asset attributable to the pre-tax loss on the disposition of AGF,
$589 million related to a reduction in tax planning strategies, and a transfer of deferred tax asset valuation
allowance to the U.S. consolidated income tax group of $582 million as a result of a U.S. tax election to treat a
foreign insurance company as a U.S. insurance company for U.S. federal income tax purposes. These increases in
the deferred tax asset valuation allowance were partially offset by $1.9 billion reduction associated primarily with
the appreciation in the available for sale securities portfolio.
AIG 2010 Form 10-K 357