Voya 2014 Annual Report Download - page 216

During the three months ended March 31, 2014, we had 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”). The deferred tax asset and the valuation allowance did not change
as a result of the IRC Section 382 event. As part of our participation in the IRS’s Compliance Assurance Process
(“CAP”), in December 2014, we entered into an IRA with the IRS relating to the IRC 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 $520.0 million per year, plus
certain capital gains and (ii) for the 2019 and subsequent tax years, $450.0 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 IRAs 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 examination or inquiry of the Company’s tax
position.
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 the 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, 2014, 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, based on our
best estimate of the ultimate outcome. 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
substantial compensatory, consequential or punitive damages and other types of relief. Moreover, certain claims
are asserted as class actions, purporting to represent a group of similarly situated individuals. It is not always
possible to accurately estimate the outcome of such lawsuits/arbitrations. Therefore, changes to such estimates
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