AIG 2012 Annual Report Download - page 348

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For the year ended December 31, 2012, the effective tax rate on pre-tax income from continuing operations was
16.8 percent. The effective tax rate for the year ended December 31, 2012, attributable to continuing operations
differs from the statutory rate primarily due to tax benefits of $1.9 billion related to a decrease in the life-insurance-
business capital loss carryforward valuation allowance and $302 million associated with tax exempt interest income.
These items were partially offset by charges of $586 million related to uncertain tax positions and $172 million
associated with the effect of foreign operations.
For the year ended December 31, 2011, the effective tax rate on pre-tax income from continuing operations was not
meaningful, due to the significant effect of releasing approximately $18.4 billion of the deferred tax asset valuation
allowance. Other factors that contributed to the difference from the statutory rate included tax benefits of $454 million
associated with tax exempt interest income, $386 million associated with the effect of foreign operations, and
$224 million related to our investment in subsidiaries and partnerships.
For the year ended December 31, 2010, the effective tax rate on pre-tax income from continuing operations was
34.5 percent. The effective tax rate for the year ended December 31, 2010, attributable to continuing operations
differs from the statutory rate primarily due to tax benefits of $1.3 billion associated with our investment in
subsidiaries and partnerships, principally the AIA SPV which is treated as a partnership for U.S. tax purposes, and
$587 million associated with tax exempt interest, partially offset by an increase in the valuation allowance attributable
to continuing operations of $1.4 billion.
The following table presents the components of the net deferred tax assets (liabilities):
Deferred tax assets:
Losses and tax credit carryforwards $ 28,223
Unrealized loss on investments 2,436
Accruals not currently deductible, and other 6,431
Investments in foreign subsidiaries and joint ventures 1,432
Loss reserve discount 1,260
Loan loss and other reserves 877
Unearned premium reserve reduction 1,696
Employee benefits 1,217
Total deferred tax assets 43,572
Deferred tax liabilities:
Adjustment to life policy reserves (1,978)
Deferred policy acquisition costs (3,340)
Flight equipment, fixed assets and intangible assets (4,530)
Unrealized gains related to available for sale debt securities (4,010)
Other (378)
Total deferred tax liabilities (14,236)
Net deferred tax assets before valuation allowance 29,336
Valuation allowance (11,047)
Net deferred tax assets (liabilities) $ 18,289
The following table presents our U.S. consolidated income tax group tax losses and credits carryforwards as
of December 31, 2012 on a tax return basis.
Net operating loss carryforwards $ 40,872 $ 14,305 2025 - 2031
Capital loss carryforwards – Life 17,249 6,037 2013 - 2014
Capital loss carryforwards – Non-Life 88 31 2013
Foreign tax credit carryforwards – 5,549 2015 - 2022
Other carryforwards and other – 515 Various
Total AIG U.S. consolidated income tax group tax losses and credits carryforwards $ 26,437
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AIG 2012 Form 10-K 331
$ 25,359
3,365
4,499
1,435
1,235
547
1,145
1,483
39,068
(1,817)
(2,816)
(2,015)
(7,464)
(225)
(14,337)
24,731
(8,036)
$ 16,695
December 31,
(in millions) 2012 2011
December 31, 2012 Tax Expiration
(in millions) Gross Effected Periods
ITEM 8 / NOTE 24. INCOME TAXES