Prudential 2001 Annual Report Download - page 140

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Prudential Financial, Inc.
Notes to Consolidated Financial Statements
17. Income Taxes
The components of income tax expense (benefit) for the years ended December 31, were as follows:
2001 2000 1999
(In Millions)
Current tax expense (benefit)
U.S. ...................................................................................... $(1,030) $362 $ 614
State and local .............................................................................. 60 31 84
Foreign ................................................................................... 43 41 (8)
Total ..................................................................................... (927) 434 690
Deferred tax expense (benefit)
U.S. ...................................................................................... 773 (86) 206
State and local .............................................................................. (74) (37) 44
Foreign ................................................................................... 171 95 102
Total ..................................................................................... 870 (28) 352
Total income tax expense (benefit) .................................................................. $ (57) $406 $1,042
The Company’s actual income tax expense (benefit) for the years ended December 31, differs from the expected
amount computed by applying the statutory federal income tax rate of 35% to income from continuing operations
before income taxes for the following reasons:
2001 2000 1999
(In Millions)
Expected federal income tax expense ................................................................. $ (79) $254 $ 789
Non-deductible expenses ........................................................................... 228 61 33
Equity tax ....................................................................................... (200) 100 190
Non-taxable investment income ..................................................................... (83) (42) (78)
State and local income taxes ........................................................................ (9) (4) 83
Other .......................................................................................... 86 37 25
Total income tax expense (benefit) ............................................................... $ (57) $406 $1,042
Deferred tax assets and liabilities at December 31, resulted from the items listed in the following table:
2001 2000
(In Millions)
Deferred tax assets
Insurance reserves ................................................................................. $ 894 $1,371
Net operating loss carryforwards ...................................................................... 366 353
Policyholder dividends ............................................................................. 210 297
Litigation related reserves ........................................................................... 88 32
Investments ...................................................................................... 34 (129)
Other ........................................................................................... 120 137
Deferred tax assets before valuation allowance ........................................................... 1,712 2,061
Valuation allowance ............................................................................... (77) (38)
Deferred tax assets after valuation allowance ............................................................ 1,635 2,023
Deferred tax liabilities
Deferred policy acquisition costs ...................................................................... 1,779 1,858
Net unrealized investment gains (losses) ................................................................ 890 273
Depreciation ...................................................................................... 159 71
Employee benefits ................................................................................. 90 16
Deferred tax liabilities .............................................................................. 2,918 2,218
Net deferred tax liability ................................................................................ $(1,283) $ (195)
Growing and Protecting Your Wealth138