Ameriprise 2010 Annual Report Download - page 162

implementation of tax planning strategies will generate sufficient taxable income to enable the Company to utilize all of its
deferred tax assets. Accordingly, no valuation allowance for deferred tax assets has been established as of December 31,
2010 and December 31, 2009.
Included in the Company’s deferred income tax assets are tax benefits related to net operating loss carryforwards of
$32 million which will expire beginning December 31, 2026, capital loss carryforwards of $28 million which will expire
December 31, 2015 as well as tax credit carryforwards of $37 million which will expire beginning December 31, 2019.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (expense) were as follows:
2010 2009 2008
(in millions)
Balance at January 1 $ (33) $ (56) $ 164
Additions (reductions) based on tax positions related to the current year 2 1 (164)
Additions for tax positions of prior years 57 45 64
Reductions for tax positions of prior years (42) (23) (120)
Settlements 91 — —
Balance at December 31 $ 75 $ (33) $ (56)
If recognized, approximately $54 million and $81 million, net of federal tax benefits, of unrecognized tax benefits as of
December 31, 2010 and December 31, 2009, respectively, would affect the effective tax rate.
The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax
provision. The Company recognized a reduction of $17 million in interest and penalties for the year ended December 31,
2010 and an increase of $1 million and a reduction of $25 million in interest and penalties for the years ended
December 31, 2009 and 2008, respectively. At December 31, 2010 and December 31, 2009, the Company had a
receivable of $29 million and $12 million, respectively, related to accrued interest and penalties.
It is reasonably possible that the total amounts of unrecognized tax benefits will change in the next 12 months. Based on
the current audit position of the Company, it is estimated that the total amount of gross unrecognized tax benefits may
decrease by $25 million to $35 million in the next 12 months.
Beginning with the 2010 tax year, the Company will file a consolidated U.S. federal income tax return which will include
both the Company’s life insurance and non-life insurance subsidiaries.
The Company or one or more of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states
and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or
non-U.S. income tax examinations by tax authorities for years before 1997. The Internal Revenue Service (‘‘IRS’’)
completed its field examination of the Company’s U.S. income tax returns for 2005 through 2007 during the third and
fourth quarters of 2010. The IRS had previously completed its field examination of the 1997 through 2004 tax returns in
recent years as part of the overall examination of the American Express Company consolidated returns. However, for
federal income tax purposes these years continue to remain open as a consequence of certain issues under appeal. In the
fourth quarter of 2010, the IRS commenced an examination of the Company’s U.S income tax returns for 2008 and
2009. The Company’s or certain of its subsidiaries’ state income tax returns are currently under examination by various
jurisdictions for years ranging from 1998 through 2008.
On September 25, 2007, the IRS issued Revenue Ruling 2007-61 in which it announced that it intends to issue
regulations with respect to certain computational aspects of the Dividends Received Deduction (‘‘DRD’’) related to separate
account assets held in connection with variable contracts of life insurance companies. Any regulations that the IRS
ultimately proposes for issuance in this area will be subject to public notice and comment, at which time insurance
companies and other members of the public will have the opportunity to raise legal and practical questions about the
content, scope and application of such regulations. As a result, the ultimate timing and substance of any such regulations
are unknown at this time, but they may result in the elimination of some or all of the separate account DRD tax benefit
that we receive.
The items comprising other comprehensive income (loss) are presented net of the following income tax provision (benefit)
amounts:
Years Ended December 31,
2010 2009 2008
(in millions)
Net unrealized securities gains (losses) $ 167 $ 753 $ (427)
Net unrealized derivatives gains (losses) 8 6 (1)
Defined benefit plans (2) 10 (34)
Foreign currency translation adjustment (6) 15 (4)
Net income tax provision (benefit) $ 167 $ 784 $ (466)
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