AIG 2013 Annual Report Download - page 345

The following table presents a reconciliation of the beginning and ending balances of the total amounts of
gross unrecognized tax benefits:
Gross unrecognized tax benefits, beginning of year $ 4,279 $ 5,296
Increases in tax positions for prior years 336 239
Decreases in tax positions for prior years (264) (1,046)
Increases in tax positions for current year 47 48
Lapse in statute of limitations (8) (7)
Settlements (5) (259)
Activity of discontinued operations –8
Gross unrecognized tax benefits, end of year $ 4,385 $ 4,279
At December 31, 2013, 2012 and 2011, our unrecognized tax benefits, excluding interest and penalties, were
$4.3 billion, $4.4 billion and $4.3 billion, respectively. The decrease from December 31, 2012 was primarily due to
certain benefits realized due to the partial completion of the IRS examination covering the years 2003-2005 and
foreign exchange translation, partially offset by increases related to foreign tax credits associated with cross border
financing transactions. At December 31, 2013, 2012 and 2011, our unrecognized tax benefits related to tax positions
that, if recognized, would not affect the effective tax rate because they relate to such factors as the timing, rather
than the permissibility, of the deduction were $0.1 billion, $0.2 billion and $0.7 billion, respectively. Accordingly, at
December 31, 2013, 2012 and 2011, the amounts of unrecognized tax benefits that, if recognized, would favorably
affect the effective tax rate were $4.2 billion, $4.2 billion and $3.5 billion, respectively.
Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At December 31,
2013 and 2012, we had accrued liabilities of $1.1 billion and $935 million, respectively, for the payment of interest
(net of the federal benefit) and penalties. For the years ended December 31, 2013, 2012 and 2011, we accrued
expense (benefits) of $142 million, $192 million and $(170) 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, 2013, 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 – 2012
Australia 2009 – 2012
France 2011 – 2012
Japan 2008 – 2012
Korea 2008 – 2012
Singapore 2011 – 2012
United Kingdom 2012
On January 14, 2011 (the Closing), we completed a series of integrated transactions to recapitalize AIG (the
Recapitalization) with the Department of the Treasury, the FRBNY and AIG Credit Facility Trust (the Trust), including
the repayment of all amounts owed under the FRBNY Credit Facility. At the Closing, we recognized a net loss on
extinguishment of debt, primarily representing $3.3 billion in accelerated amortization of the remaining prepaid
commitment fee asset resulting from the termination of the FRBNY Credit Facility.
Accounting For Uncertainty in Income Taxes
24. RECAPITALIZATION
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AIG 2013 Form 10-K 327
ITEM 8 / NOTE 23. INCOME TAXES
Years Ended December 31,
(in millions) 2013 2012 2011
$ 4,385
680
(796)
43
(20)
(2)
50
$ 4,340
At December 31, 2013 Open Tax Years
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