AIG 2013 Annual Report Download - page 343

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.
Our framework for assessing the recoverability of deferred tax assets requires us to consider all available evidence,
including:
• the nature, frequency, and amount of cumulative financial reporting income and losses in recent years;
• the sustainability of recent operating profitability of our subsidiaries;
• the predictability of future operating profitability of the character necessary to realize the net deferred tax asset;
• the carryforward periods for the net operating loss, capital loss and foreign tax credit carryforwards, including the
effect of reversing taxable temporary differences; and,
• prudent and feasible actions and tax planning strategies that would be implemented, if necessary, to protect
against the loss of the deferred tax asset.
As a result of sales in the ordinary course of business to manage the investment portfolio and the implementation of
prudent and feasible tax planning strategies during the year ended December 31, 2013, certain capital loss
carryforwards primarily related to AIG Life and Retirement were realized prior to their expiration. Therefore, for the
year ended December 31, 2013, we recognized a decrease of $3.5 billion of capital loss carryforward valuation
allowance associated with AIG Life and Retirement, of which $3.3 billion was allocated to income from continuing
operations and $200 million was allocated to other comprehensive income. Included in the $3.3 billion allocated to
continuing operations was a decrease in deferred tax asset valuation allowance of $552 million related to a portion of
AIG Life and Retirement’s capital loss carryforward that expired in 2013. During the year ended December 31, 2013,
we also recognized a $1.0 billion decrease to our deferred tax asset valuation allowance associated with certain
state, local and foreign jurisdictions, primarily attributable to our ability to demonstrate sustainability of recent
operating profitability within those jurisdictions over the relevant carryforward periods as well as routine business
operations in the current year. Included in the $1.0 billion was a decrease in deferred tax asset valuation allowance
of $377 million related to tax attributes that expired.
The following table presents the net deferred tax assets (liabilities) at December 31, 2013 and 2012 on a
U.S. GAAP basis:
Net U.S. consolidated return group deferred tax assets $ 29,550
Net deferred tax assets (liabilities) in accumulated other comprehensive income (7,174)
Valuation allowance (5,068)
Subtotal 17,308
Net foreign, state and local deferred tax assets 3,126
Valuation allowance (2,968)
Subtotal 158
Subtotal – Net U.S, foreign, state and local deferred tax assets 17,466
Net foreign, state and local deferred tax liabilities (771)
Total AIG net deferred tax assets (liabilities) $ 16,695
At December 31, 2013, and 2012, our U.S. consolidated income tax group had net deferred tax assets after valuation
allowance of $21.3 billion and $17.3 billion, respectively. At December 31, 2013, and 2012, our U.S. consolidated
income tax group had valuation allowances of $1.7 billion and $5.1 billion, respectively.
At December 31, 2013 and 2012, we had net deferred tax liabilities of $116 million and $613 million, respectively,
related to foreign subsidiaries, state and local tax jurisdictions, and certain domestic subsidiaries that file separate tax
returns.
Deferred Tax Asset Valuation Allowance of U.S. Consolidated Income Tax Group
Deferred Tax Liability — Foreign, State and Local
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AIG 2013 Form 10-K 325
ITEM 8 / NOTE 23. INCOME TAXES
December 31,
(in millions) 2013 2012
$ 26,296
(3,337)
(1,650)
21,309
2,563
(1,947)
616
21,925
(732)
$ 21,193
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