Voya 2014 Annual Report Download - page 362

Voya Financial, Inc.
Notes to the Consolidated Financial Statements
(Dollar amounts in millions, unless otherwise stated)
reinsurance, entry into an Issue Resolution Agreement (“IRA”) with the Internal Revenue Service (“IRS”)
regarding the Internal Revenue Code (“IRC”) Section 382 calculation and emergence from a cumulative loss to
cumulative income in recent years. The IRA with the IRS significantly reduced uncertainty in the Company’s
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 loss from the sale of certain businesses and a
$372.7 loss from 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,
represents significant positive evidence. As of December 31, 2014, the cumulative positive evidence outweighed
the negative evidence regarding the likelihood that certain of the Company’s deferred tax assets for the
Company’s U.S. consolidated income tax group will be realized. This assessment was evidenced by the
Company’s consideration of the facts and circumstances (mentioned above) and resulted in the Company’s
conclusion that $1.64 billion of the deferred tax asset valuation allowance for the Company’s 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. The Company 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.
For the years ended December 31, 2014, 2013 and 2012, the increases (decreases) in the valuation allowances
were $(1.85) billion, $(152.2), and $99.1, respectively. In 2014, 2013 and 2012, there were increases (decreases)
of $(1.85) billion, $(86.6), and $99.1, respectively, in the valuation allowance that were allocated to operations
and (decreases) of $0.0, $(65.6) and $0.0, respectively, that were allocated to Other comprehensive income. With
respect to the 2014 amount allocated to operations, the change of $(1.85) billion was due to favorable
developments as discussed above. With respect to the 2013 amount allocated to operations, the decrease of
$(86.6) was due to positive evidence primarily the result of current year Income before income tax. With respect
to the 2012 amount allocated to operations, there was a decrease of $(48.3) that impacted income tax expense as
a reduction in the valuation allowance due to positive evidence primarily the result of Income before income tax,
and the remainder consisted of a $147.4 increase in the valuation allowance that did not impact income tax
expense, which was established against the Company’s estimate of additional deferred tax assets based on the
Company’s 2011 tax return as filed. For 2013, the valuation allowance allocated to Other comprehensive income
was directly related to the appreciation of the Company’s available-for-sale portfolio during that year and not due
to changes in expectations of taxable income in future periods.
As a result of certain realization requirements of ASC 718, the table of deferred tax assets and liabilities shown
above does not include certain deferred tax assets as of December 31, 2014 and 2013, that arose directly from tax
deductions related to equity compensation greater than compensation recognized for financial reporting.
Additional paid-in capital will be increased by $10.2 if and when such deferred tax assets are ultimately realized.
The Company uses tax law ordering when determining when excess tax benefits have been realized.
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