AIG 2014 Annual Report Download - page 336

ITEM 8 / NOTE 24. INCOME TAXES
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We continue to monitor legal and other developments in this area and evaluate the effect, if any, on our position, including
recent decisions adverse to other taxpayers.
Accounting For Uncertainty in Income Taxes
The following table presents a reconciliation of the beginning and ending balances of the total amounts of gross
unrecognized tax benefits:
Years Ended December 31,
(in millions) 2014 2013 2012
Gross unrecognized tax benefits, beginning of year $ 4,340 $4,385 $4,279
Increases in tax positions for prior years 91 680 336
Decreases in tax positions for prior years (60) (796) (264)
Increases in tax positions for current year 10 43 47
Lapse in statute of limitations (6) (20) (8)
Settlements - (2) (5)
Activity of discontinued operations 20 50 -
Gross unrecognized tax benefits, end of year $ 4,395 $4,340 $4,385
At December 31, 2014, 2013 and 2012, our unrecognized tax benefits, excluding interest and penalties, were $4.4 billion, $4.3
billion and $4.4 billion, respectively. At December 31, 2014, 2013 and 2012, 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 $0.3 billion, $0.1 billion and $0.2 billion, respectively. Accordingly, at December 31,
2014, 2013 and 2012, the amounts of unrecognized tax benefits that, if recognized, would favorably affect the effective tax rate
were $4.1 billion, $4.2 billion and $4.2 billion, respectively.
Interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At both December 31, 2014
and 2013, we had accrued liabilities of $1.1 billion for the payment of interest (net of the federal benefit) and penalties. For the
years ended December 31, 2014, 2013 and 2012, we accrued expense (benefits) of $21 million, $142 million and $192 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, 2014, 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:
At December 31, 2014 Open Tax Years
Major Tax Jurisdiction
United States 2000-2013
Australia 2010-2013
France 2012-2013
Japan 2008-2013
Korea 2009-2013
Singapore 2011-2013
United Kingdom 2013