AIG 2012 Annual Report Download - page 351

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Accounting For Uncertainty in Income Taxes
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The following table presents a rollforward of the beginning and ending balances of the total amounts of
gross unrecognized tax benefits:
Gross unrecognized tax benefits, beginning of year $ 5,296 $ 4,843
Increases in tax positions for prior years 239 888
Decreases in tax positions for prior years (1,046) (470)
Increases in tax positions for current year 48 49
Lapse in statute of limitations (7) (6)
Settlements (259) (12)
Activity of discontinued operations 8 –
Less: Unrecognized tax benefits of held for sale entities – 4
Gross unrecognized tax benefits, end of year $ 4,279 $ 5,296
At December 31, 2012, 2011 and 2010, our unrecognized tax benefits related to tax positions that if recognized
would not affect the effective tax rate as they relate to such factors as the timing, rather than the permissibility, of the
deduction were $0.2 billion, $0.7 billion and $1.7 billion, respectively. Accordingly, at December 31, 2012, 2011
and 2010, the amounts of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate
were $4.2 billion, $3.5 billion and $3.6 billion, respectively.
The decrease in the gross unrecognized tax benefits for 2012 was primarily related to tax positions that did not affect
the effective tax rate because they relate to timing.
Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31,
2012 and 2011, we had accrued liabilities of $935 million and $744 million, respectively, for the payment of interest
(net of the federal benefit) and penalties. For the years ended December 31, 2012, 2011 and 2010, we accrued
expense (benefits) of $189 million, $(174) million and $149 million, respectively, for the payment of interest (net of
the federal benefit) and penalties.
We regularly evaluate adjustments proposed by taxing authorities. At December 31, 2012, such proposed
adjustments would not have resulted in a material change to our consolidated financial condition, although it is
possible that the effect could be material to our consolidated results of operations for an individual reporting period.
Although it is reasonably possible that a change in the balance of unrecognized tax benefits may occur within the
next 12 months, based on the information currently available, we do not expect any change to be material to our
consolidated financial condition.
Listed below are the tax years that remain subject to examination by major tax jurisdictions:
Major Tax Jurisdiction
United States 2000 - 2011
Australia 2008 - 2011
France 2008 - 2011
Japan 2007 - 2011
Korea 2007 - 2011
Singapore 2011
United Kingdom 2010 - 2011
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AIG 2012 Form 10-K334
Years Ended December 31,
(in millions) 2012 2011 2010
$ 4,279
322
(253)
–
(8)
(5)
50
–
$ 4,385
At December 31, 2012 Open Tax Years
ITEM 8 / NOTE 24. INCOME TAXES