Assurant 2011 Annual Report Download - page 105

ASSURANT, INC.2011 Form10-K F-29
7 Income Taxes
A reconciliation of the beginning and ending amount of unrecognized tax bene ts for the years ended December31, 2011, 2010 and 2009 is
as follows:
YearEndedDecember31,
2011 2010 2009
Balance at beginning of year $ (13,844) $ (23,142) $ (15,780)
Additions based on tax positions related to the current year (758) (1,209) (8,513)
Reductions based on tax positions related to the current year 997 19,266 8,738
Additions for tax positions of prior years (5,512) (14,277) (10,144)
Reductions for tax positions of prior years 483 3,903 1,293
Lapses 700 1,120 472
Settlements 410 495 792
BALANCE AT END OF YEAR $ 17,524 $ 13,844 $ 23,142
 e total unrecognized tax bene t, $21,563, $22,249, and $22,321
for 2011, 2010, and 2009, respectively, which includes interest, would
impact the Company’s consolidated e ective tax rate if recognized.  e
liability for unrecognized tax bene ts is included in tax payable on the
consolidated balance sheets.
 e Company’s continuing practice is to recognize interest expense
related to income tax matters in income tax expense. During the years
ended December31, 2011, 2010 and 2009, the Company recognized
approximately $600, $1,000 and $1,500, respectively, of interest expense
related to income tax matters.  e Company had $6,600 and $5,700
of interest accrued as of December31, 2011 and 2010, respectively.
No penalties have been accrued.
 e Company, and its subsidiaries,  le income tax returns in the U.S. and
various state and foreign jurisdictions.  e Company has substantially
concluded all U.S. federal income tax matters for years through 2004.
Tax years 2005-2008 are currently under federal audit. Substantially
all state, local and non-U.S. income tax matters have been concluded
for the years through 2005.
 e tax e ects of temporary di erences that result in signi cant deferred tax assets and deferred tax liabilities are as follows:
December31,
2011 2010
Deferred Tax Assets
Policyholder and separate account reserves $ 482,449 $ 512,504
Accrued liabilities 5,498 10,286
Investments, net 226,494 76,703
Net operating loss carryforwards 52,674 52,897
Capital loss carryforwards — 147,887
Deferred gain on disposal of businesses 47,011 54,185
Compensation related 56,724 61,846
Employee and post-retirement bene ts 128,439 115,497
Other 87,051 48,268
Total deferred tax asset 1,086,340 1,080,073
Less valuation allowance (10,154) (90,738)
Deferred tax assets, net of valuation allowance 1,076,186 989,335
Deferred Tax Liabilities
Deferred acquisition costs (747,946) (705,807)
Net unrealized appreciation on securities (360,700) (207,098)
Total deferred tax liability (1,108,646) (912,905)
NET DEFERRED INCOME TAX LIABILITY ASSET $ 32,460 $ 76,430
 e Company’s total valuation allowance against deferred tax assets
decreased by $80,584 to $10,154 at December31, 2011 from $90,738
at December31, 2010. A cumulative valuation allowance of $10,154
has been recorded because it is management’s assessment that it is
more likely than not that only $1,076,186 of deferred tax assets will
be realized. Of the total $10,154 valuation allowance, $9,472 relates to
the deferred tax assets attributable to certain international subsidiaries.
 e Company’s ability to realize deferred tax assets depends on its ability
to generate su cient taxable income of the same character within the
carryback or carryforward periods. In assessing future taxable income,
the Company considered all sources of taxable income available to
realize its deferred tax asset, including the future reversal of existing
temporary di erences, future taxable income exclusive of reversing
temporary di erences and carryforwards, taxable income in carryback
years and tax-planning strategies. If changes occur in the assumptions
underlying the Company’s tax planning strategies or in the scheduling
of the reversal of the Company’s deferred tax liabilities, the valuation
allowance may need to be adjusted in the future.
Other than for certain wholly owned Canadian subsidiaries, deferred
taxes have not been provided on the undistributed earnings of wholly
owned foreign subsidiaries since the Company intends to inde nitely
reinvest the earnings in these other jurisdictions.  e cumulative amount