Voya 2014 Annual Report Download - page 105

As of December 31, 2014, we have a net deferred tax asset balance of $1.3 billion. Recognition of this asset
has been based on projections of future taxable income and on tax planning related to unrealized gains on
investment assets. To the extent that our estimates of future taxable income decrease or if actual future taxable
income is less than the projected amounts, the recognition of the deferred tax asset may be reduced. Also, to the
extent unrealized gains decrease, the tax benefit may be reduced. Any reduction in the deferred tax asset may be
recorded as a tax expense in tax on continuing operations based on the intra period tax allocation rules described
in ASC Topic 740, “Income Taxes”.
Our ability to use beneficial U.S. tax attributes is subject to limitations.
Section 382 (“Section 382”) and Section 383 of the U.S. Internal Revenue Code of 1986, as amended (the
“Internal Revenue Code”), operate as anti-abuse rules, the general purpose of which is to prevent trafficking in
tax losses and credits, but which can apply without regard to whether a “loss trafficking” transaction occurs or is
intended. These rules are triggered by the occurrence of an ownership change—generally defined as when the
ownership of a company, or its parent, changes by more than 50% (measured by value) on a cumulative basis in
any three year period (“Section 382 event”). If triggered, the amount of the taxable income for any post-change
year which may be offset by a pre-change loss is subject to an annual limitation. Generally speaking, this
limitation is derived by multiplying the fair market value of the Company immediately before the date of the
Section 382 event by the applicable federal long-term tax-exempt rate. As part of our participation in the IRS’s
Compliance Assurance Process (“CAP”), in December 2014, we entered into an Issue Resolution Agreement
(“IRA”) with the IRS relating to the Internal Revenue Code Section 382 calculation of the annual limitation on
the use of certain of the Company’s federal tax attributes that will apply as a consequence of the Section 382
event experienced by the Company in March 2014. Under the IRA, this annual limitation is estimated to be (i) for
the 2014 to 2018 tax years, approximately $520 million per year, plus certain capital gains and (ii) for the 2019
and subsequent tax years, $450 million per year. To the extent the annual limitation is not met within any one
year the excess will be available in subsequent years. The annual limitation under the IRA will apply to an
amount estimated to be not greater than approximately $3.2 billion of the Company’s federal tax attributes
related to net operating losses and capital losses and approximately $285 million related to tax credits. As with
issue resolution agreements entered into under the CAP, the matters addressed by the IRA may be re-visited by
the IRS in connection with a tax audit or other an examination or inquiry of the Company’s tax position.
Although we experienced a Section 382 event during the quarter ended March 31, 2014, the deferred tax
asset, the valuation allowance, and the admitted deferred tax asset did not change as a result of this event.
Because our estimates and underlying data are dependent on many factors and because the application of
Section 382 is the subject of ongoing review by the IRS, the ultimate impact of the Section 382 event may be
materially different.
Our business may be negatively affected by adverse publicity or increased governmental and regulatory
actions with respect to us, other well-known companies or the financial services industry in general.
Governmental scrutiny with respect to matters relating to compensation, compliance with regulatory and tax
requirements and other business practices in the financial services industry has increased dramatically in the past
several years and has resulted in more aggressive and intense regulatory supervision and the application and
enforcement of more stringent standards. The financial crisis of 2008-09 and current political and public
sentiment regarding financial institutions has resulted in a significant amount of adverse press coverage, as well
as adverse statements or charges by regulators and elected officials. Press coverage and other public statements
that assert some form of wrongdoing, regardless of the factual basis for the assertions being made, could result in
some type of inquiry or investigation by regulators, legislators and/or law enforcement officials or in lawsuits.
Responding to these inquiries, investigations and lawsuits, regardless of the ultimate outcome of the proceeding,
is time-consuming and expensive and can divert the time and effort of our senior management from its business.
Future legislation or regulation or governmental views on compensation may result in us altering compensation
practices in ways that could adversely affect our ability to attract and retain talented employees. Adverse
publicity, governmental scrutiny, pending or future investigations by regulators or law enforcement agencies and/
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