INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2011

INCOME TAXES

Schedule of income (loss) from continuing operations before income tax expense (benefit) by U.S. and foreign location

Years Ended December 31, (in millions)	2011			2010		2009
U.S.	$	(1,942	)	$	13,208	$	(17,122	)
Foreign		877			4,728		2,815
Total	$	(1,065	)	$	17,936	$	(14,307	)

Schedule of income tax expense (benefit) attributable to pre-tax income (loss) from continuing operations

Years Ended December 31, (in millions)			2011			2010			2009
Foreign and U.S. components of actual income tax expense:
	Foreign:
		Current	$	303		$	807		$	1,573
		Deferred		100			318			3,661
	U.S.:
		Current		(208	)		(163	)		1,229
		Deferred		(18,231	)		4,897			(7,952	)
Total			$	(18,036	)	$	5,859		$	(1,489	)

Schedule of reconciliation between actual income tax (benefit) expense and statutory U.S. federal amount computed by applying the federal income tax rate

				2011									2010									2009
Years Ended December 31, (dollars in millions)				Pre-Tax Income (Loss)			Tax Expense/ (Benefit)			Percent of Pre-Tax Income (Loss)			Pre-Tax Income (Loss)			Tax Expense/ (Benefit)			Percent of Pre-Tax Income (Loss)			Pre-Tax (Loss)			Tax Expense/ (Benefit)			Percent of Pre-Tax (Loss)
U.S. federal income tax at statutory rate				$	1,007		$	352			35.0	%	$	17,711		$	6,199			35.0	%	$	(15,423	)	$	(5,398	)	35.0%
	Adjustments:
		Tax exempt interest						(454	)		(45.1	)					(587	)		(3.3	)					(677	)	4.4
		Investment in subsidiaries and partnerships						(224	)		(22.2	)					(1,320	)		(7.5	)					(473	)	3.1
		Variable interest entities						(43	)		(4.3	)					(2	)		(0.0	)					435		(2.8)
		Uncertain tax positions						(25	)		(2.5	)					(37	)		(0.2	)					874		(5.7)
		Dividends received deduction						(52	)		(5.2	)					(108	)		(0.6	)					(117	)	0.8
		Effect of foreign operations						(346	)		(34.4	)					206			1.2						(130	)	0.8
		Bargain purchase gain						-			-						(116	)		(0.7	)					-		-
		State income taxes						(87	)		(8.6	)					(126	)		(0.7	)					155		(1.0)
		Other						130			12.9						185			1.0						314		(2.0)
		Effect of discontinued operations						(189	)		(18.8	)					(642	)		(3.6	)					(1,012	)	6.6
		Effect of discontinued operations – goodwill						-			-						1,268			7.2						3		(0.0)
		Valuation allowance:
			Continuing operations					(16,561	)		NM						1,486			8.4						3,137		(20.3)
			Discontinued operations					-			-						1,292			7.3						(221	)	1.4
Consolidated total amounts					1,007			(17,499	)		NM			17,711			7,698			43.5			(15,423	)		(3,110	)	20.2
Amounts attributable to discontinued operations					2,072			537			25.9			(225	)		1,839			NM			(1,116	)		(1,621	)	145.3
Amounts attributable to continuing operations				$	(1,065	)	$	(18,036	)		NM	%	$	17,936		$	5,859			32.7	%	$	(14,307	)	$	(1,489	)	10.4%

Schedule of components of the net deferred tax asset

December 31, (in millions)		2011			2010
Deferred tax assets:
	Losses and tax credit carryforwards	$	28,223		$	25,195
	Unrealized loss on investments		2,436			3,223
	Accruals not currently deductible, and other		6,431			3,036
	Investments in foreign subsidiaries and joint ventures		1,432			2,207
	Loss reserve discount		1,260			1,264
	Loan loss and other reserves		877			1,093
	Unearned premium reserve reduction		1,696			825
	Employee benefits		1,217			1,034
Total deferred tax assets			43,572			37,877
Deferred tax liabilities:
	Adjustment to life policy reserves		(1,978	)		(458	)
	Deferred policy acquisition costs		(5,087	)		(4,387	)
	Flight equipment, fixed assets and intangible assets		(4,530	)		(4,753	)
	Unrealized gains related to available for sale debt securities		(4,010	)		(3,317	)
	Other		(378	)		(466	)
Total deferred tax liabilities			(15,983	)		(13,381	)
Net deferred tax assets before valuation allowance			27,589			24,496
Valuation allowance			(11,018	)		(25,773	)
Net deferred tax assets (liabilities)		$	16,571		$	(1,277	)

Schedule of consolidated income tax group tax losses and credits carryforwards

December 31, 2011 (in millions)	Gross		Tax Effected		Expiration Periods
Net operating loss carryforwards	$	45,273	$	15,846		2028 - 2031
Capital loss carryforwards – Life		21,213		7,425		2013 - 2014
Capital loss carryforwards – Non-Life		88		30		2014 - 2015
Foreign tax credit carryforwards		-		4,609		2016 - 2021
Other carryforwards and other		-		496		Various
Total AIG U.S. consolidated income tax group tax losses and credits carryforwards			$	28,406

Schedule of net deferred tax assets (liabilities)

	December 31,
(in millions)	2011			2010
Net U.S. consolidated return group deferred tax assets	$	27,691		$	26,563
Net deferred tax assets (liabilities) in Other comprehensive income		(2,938	)		(2,901	)
Valuation allowance		(7,240	)		(23,840	)
Subtotal		17,513			(178	)
Net foreign, state & local deferred tax assets*		2,836			2,126
Valuation allowance		(3,778	)		(3,225	)
Subtotal		(942	)		(1,099	)
Total AIG net deferred tax assets (liabilities)	$	16,571		$	(1,277	)

*

Amount includes deferred tax liabilities for certain jurisdictions which are not available to offset deferred tax assets from other jurisdictions.

Schedule of rollforward of the beginning and ending balances of the total amounts of gross unrecognized tax benefits

Years Ended December 31, (in millions)		2011			2010			2009
Gross unrecognized tax benefits, beginning of year		$	5,296		$	4,843		$	3,368
	Increases in tax positions for prior years		239			888			1,628
	Decreases in tax positions for prior years		(1,046	)		(470	)		(132	)
	Increases in tax positions for current year		48			49			142
	Lapse in statute of limitations		(7	)		(6	)		(47	)
	Settlements		(259	)		(12	)		(9	)
	Activity of discontinued operations		8			-			(46	)
	Less: Unrecognized tax benefits of held for sale entities		-			4			(61	)
Gross unrecognized tax benefits, end of year		$	4,279		$	5,296		$	4,843

Schedule of tax years that remain subject to examination by major tax jurisdictions

At December 31, 2011		Open Tax Years
Major Tax Jurisdiction
	United States		2000 - 2010
	France		2008 - 2010
	Hong Kong		2004 - 2009
	Japan		2006 - 2010
	Korea		2009
	Malaysia		2002 - 2010
	Taiwan		2007 - 2010
	Thailand		2006 - 2010
	United Kingdom		2008 - 2009