Assurant 2012 Annual Report Download - page 106

ASSURANT, INC.2012 Form10-KF-30
7 Income Taxes
 e total unrecognized tax bene t, $12,442, $21,563, and $22,249
for 2012, 2011, and 2010, 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, 2012, 2011 and 2010, the Company recognized
approximately $1,200, $600 and $1,000, respectively, of interest expense
related to income tax matters.  e Company had $4,300 and $6,600
of interest accrued as of December31, 2012 and 2011, 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 2008.
 e next federal audit cycle will include tax years 2009-2011 and should
begin in 2013. Substantially all state, local and non-U.S. income tax
matters have been concluded for the years through 2006.
 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,
2012 2011
Deferred Tax Assets
Policyholder and separate account reserves $ 548,512 $ 512,392
Accrued liabilities 5,295 5,498
Investments, net 206,517 226,494
Net operating loss carryforwards 75,828 52,674
Deferred gain on disposal of businesses 40,554 47,011
Compensation related 46,456 56,724
Employee and post-retirement bene ts 122,599 128,439
Other 112,309 87,237
Total deferred tax asset 1,158,070 1,116,469
Less valuation allowance (13,091) (10,154)
Deferred tax assets, net of valuation allowance 1,144,979 1,106,315
Deferred Tax Liabilities
Deferred acquisition costs (799,966) (701,335)
Net unrealized appreciation on securities (506,301) (360,700)
Total deferred tax liability (1,306,267) (1,062,035)
NET DEFERRED INCOME TAX LIABILITY ASSET $ 161,288  $ 44,280
The Company’s valuation allowance against deferred tax assets
increased by $2,937 to $13,091 at December31, 2012 from $10,154
at December31, 2011. A cumulative valuation allowance of $13,091
has been recorded because it is management’s assessment that it is
more likely than not that only $1,144,979 of deferred tax assets will
be realized.  e valuation allowance 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
of undistributed earnings for which the Company has not provided
deferred income taxes is $136,822. Upon distribution of such earnings
in a taxable event, the Company would incur additional U.S. income
taxes of $31,951 net of anticipated foreign tax credits.