Voya 2014 Annual Report Download - page 214

use of estimates are required in determining whether a valuation allowance is necessary and, if so, the amount of
such valuation allowance. In evaluating the need for a valuation allowance, we consider many factors, including:
• The nature, frequency and severity of book income or losses in recent years;
• The nature and character of the deferred tax assets and liabilities;
• The nature and character of income by life and non-life subgroups;
• The recent cumulative book income (loss) position after adjustment for permanent differences;
• Taxable income in prior carryback years;
• Projected future taxable income, exclusive of reversing temporary differences and carryforwards;
• Projected future reversals of existing temporary differences;
• The length of time carryforwards can be utilized;
• Prudent and feasible tax planning strategies we would employ to avoid a tax benefit from expiring
unused; and
• Tax rules that would impact the utilization of the deferred tax assets.
We have assessed whether it is more likely than not that the deferred tax assets will be realized in the future.
In making this assessment, we considered the available sources of income and positive and negative evidence
regarding our ability to generate sufficient taxable income to realize our deferred tax assets, which include net
operating loss carryforwards (“NOLs”), capital loss carryforwards and tax credit carryforwards.
Positive evidence includes a recent history of earnings, projected earnings attributable to our ongoing insurance
and investment businesses, plans or the ability to sell certain assets and streams of revenues, plans to reduce future
projected losses by reduction of sales of certain products and predictable patterns of loss and income recognition.
Negative evidence includes operating losses in certain years in certain life businesses, large losses in the non-life
business and the potential unpredictability of certain components of future projected taxable income.
We use judgment in considering the relative impact of negative and positive evidence. The weight given to
the potential effect of negative and positive evidence is commensurate with the extent to which it can be
objectively verified. The more negative evidence that exists, (a) the more positive evidence is necessary and
(b) the more difficult it is to support a conclusion that a valuation allowance is not needed for some portion of or
the entire deferred tax asset.
During the three months ended December 31, 2014, we experienced significant favorable developments,
including continued strong results of operation of our Ongoing Business, reduction in the ING Group ownership
to below 20%, the sale of certain under-performing businesses via indemnity reinsurance, entry into an Issue
Resolution Agreement (“IRA”) with the Internal Revenue Service (“IRS”) regarding the Internal Revenue Code
(“IRC”) Section 382 event (defined below) calculation and emergence from a cumulative loss to cumulative
income in recent years. The IRA with the IRS significantly reduced uncertainty in our ability to use certain
losses. During the fourth quarter of 2014, results were positive after excluding losses from items not indicative of
future profitability, such as the $107.0 million loss from the sale of certain businesses and a $372.7 million loss
from the immediate recognition of net actuarial losses related to pension and other postretirement benefit
obligations. These facts, coupled with strong full year results and projections of sufficient taxable income,
represent significant positive evidence. As of December 31, 2014, the cumulative positive evidence outweighed
the negative evidence regarding the likelihood that certain of our deferred tax assets for our U.S. consolidated
income tax group will be realized. This assessment was evidenced by our consideration of facts and
circumstances (mentioned above) and resulted in our conclusion that $1.64 billion of the deferred tax asset
valuation allowance for our U.S. consolidated income tax group should be released in the fourth quarter of 2014.
On a year-to-date basis, the total decrease in the valuation allowance was $1.85 billion. We determined that
deferred tax assets related to certain federal and state loss carryforwards, state temporary differences and tax
credits were not realizable on a more-likely-than not basis prior to the expiration of their respective carryforward
periods. Thus, a corresponding valuation allowance remains against these deferred tax assets.
191