Voya 2013 Annual Report Download - page 197

Also, should we have a Section 382 ownership change, using information available as of December 31,
2013, we estimate that the deferred tax asset that would potentially be subject to an additional valuation
allowance was approximately $315 million to $350 million (mainly as a result of built-in losses), which could
change following the final Section 382 calculations. Under statutory accounting, a Section 382 event could
reduce the admitted deferred tax asset by approximately $39 million if measured as of December 31, 2013.
However, using the estimated Section 382 value of the Company based on the share price of $35.15 per
share as of December 31, 2013, we estimate that it is unlikely that the deferred tax asset, the tax valuation
allowance or the admitted deferred tax asset will change as a result of the Section 382 event. This estimate may
change because the computation is dependent on several factors and because numerous aspects of the application
of Section 382 are subject to potential challenge by the U.S. Internal Revenue Service. The actual impact on the
valuation allowance is dependent mainly on the level of the unrealized capital gains and losses at the time of the
ownership change, the calculated Section 382 limitation, the estimated reversal pattern of the capital losses
supported by tax planning strategies, the estimated reversal pattern of the unrealized capital gains comprising the
tax planning strategies and the estimated reversal pattern of the unrealized capital. The actual impact may be
materially different from this estimate. The amounts described above are based solely on data and assumptions as
of December 31, 2013.
Tax Contingencies
In establishing unrecognized tax benefits, we determine whether a tax position is more likely than not to be
sustained under examination by the appropriate taxing authority. We also consider positions which have been
reviewed and agreed to as part of an examination by the appropriate taxing authority. Tax positions that do not
meet the more likely than not standard are not recognized. Tax positions that meet this standard are recognized in
our Consolidated Financial Statements. We measure the tax position as the largest amount of benefit that is
greater than 50% likely of being realized upon ultimate resolution with a taxing authority that has full knowledge
of all relevant information.
Changes in Law
Certain changes or future events, such as changes in tax legislation, geographic mix of earnings, completion
of tax audits, planning opportunities and expectations about future outcomes could have an impact on our
estimates of valuation allowances, deferred taxes, tax provisions, and effective tax rates.
For example, a reduction in the corporate tax rate would most likely result in a tax expense based on the fact
that, as of December 31, 2013, we have a deferred tax asset. Conversely, an increase in the corporate tax rate
would most likely result in an additional tax benefit.
Contingencies
A loss contingency is an existing condition, situation or set of circumstances involving uncertainty as to
possible loss that will ultimately be resolved when one or more future events occur or fail to occur. Examples of
loss contingencies include pending or threatened adverse litigation, threat of expropriation of assets and actual or
possible claims and assessments. Amounts related to loss contingencies involve considerable judgments and are
accrued if it is probable that a loss has been incurred and the amount can be reasonably estimated. Reserves are
established reflecting management’s best estimate, reviewed on a quarterly basis and revised as additional
information becomes available. When a loss contingency is reasonably possible, but not probable, disclosure is
made of our best estimate of possible loss, or the range of possible loss, or a statement is made that such an
estimate cannot be made.
We are involved in threatened or pending lawsuits/arbitrations arising from the normal conduct of business.
Due to the climate in insurance and business litigation/arbitration, suits against us sometimes include claims for
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