INCOME TAXES

12 Months Ended

Dec. 31, 2014

Income Taxes [Abstract]

INCOME TAXES

9) INCOME TAXES

A summary of the income tax (expense) benefit in the statements of earnings (loss) follows:

		2014		2013		2012
		(In Millions)
Income tax (expense) benefit:
	Current (expense) benefit	$	(3)	$	(90)	$	(4)
	Deferred (expense) benefit		8		74		(2)
Total		$	5	$	(16)	$	(6)

The Federal income taxes attributable to operations are different from the amounts determined by multiplying the earnings (loss), before income taxes by the expected Federal income tax rate of 35%. The sources of the difference and their tax effects are as follows:

	2014		2013		2012
	(In Millions)
Expected income tax (expense) benefit	$	4	$	(15)	$	(15)
Dividends received deduction		1		1		2
Tax settlement		-		-		9
Prior year adjustment		-		(2)		-
Other		-		-		(2)
Income Tax (Expense) Benefit	$	5	$	(16)	$	(6)

MLOA recognized a tax benefit in 2012 of $9 million related to the settlement with the IRS of the audit for tax years 2004 - 2007.

The components of the net deferred income taxes are as follows:

	December 31, 2014				December 31, 2013
	Assets		Liabilities		Assets		Liabilities
	(In Millions)
Reserves and reinsurance	$	105	$	-	$	77	$	-
DAC		-		78		-		56
VOBA		-		3		-		6
Investments		-		18		-		13
Goodwill and other intangible assets		-		9		-		9
Other		-		8		-		7
Total	$	105	$	116	$	77	$	91

MLOA does not provide income taxes on the undistributed earnings related to its investment in AllianceBernstein units except to the extent that such earnings are not permanently invested outside the United States. As of December 31, 2014, $8 million of accumulated undistributed earnings related to its investment in AllianceBernstein units were permanently invested outside the United States. At existing applicable income tax rates, additional taxes of approximately $3 million would need to be provided if such earnings were remitted.

At December 31, 2014 and 2013, of the total amount of unrecognized tax benefits, $6 million and $5 million, respectively, would affect the effective tax rate.

MLOA recognizes accrued interest and penalties related to unrecognized tax benefits in tax (expense) benefit. Interest and penalties included in the amounts of unrecognized tax benefits at December 31, 2014 and 2013 were $0 million and $0 million, respectively. Tax (expense) benefit for 2014 reflected a benefit of $0 million in interest expense related to unrecognized tax benefits.

A reconciliation of unrecognized tax benefits (excluding interest and penalties) follows:

	2014		2013		2012
	(In Millions)
Balance, beginning of year	$	5	$	4	$	17
Additions for tax positions of prior years		1		1		1
Reductions for tax positions of prior years		-		-		(2)
Settlements with tax authorities		-		-		(12)
Balance, End of Year	$	6	$	5	$	4

In 2012, the IRS concluded its examination of the tax returns of MONY Life and its subsidiaries from the date of its acquisition by AXA Financial in 2004 through 2007. The completion of this examination resulted in the release of $12 million of unrecognized tax benefits for MLOA. It is reasonably possible that the total amounts of unrecognized tax benefits will change within the next 12 months. The possible change in the amount of unrecognized tax benefits cannot be estimated at this time.