Income Taxes (Tables)

9 Months Ended

Sep. 30, 2020

The following are the major jurisdictions in which Ambac and its subsidiaries operate and the earliest tax years subject to examination:


Jurisdiction			Tax Year
United States			2010
New York State			2013
New York City			2016
United Kingdom			2016
Italy			2015

Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block]

U.S. and foreign components of pre-tax income (loss) were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
U.S.	$	(106)	$	60	$	(412)	$	(61)
Foreign	(2)		9		(15)		(11)
Total	$	(108)	$	69	$	(427)	$	(72)

Schedule of Components of Income Tax Expense (Benefit)

The components of the provision for income taxes were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Current taxes
U. S. federal	$	—	$	—	$	—	$	—
U.S. state and local	—		—		—		(3)
Foreign	(1)		4		—		38
Current taxes	(1)		4		1		35
Deferred taxes

Foreign	1		(1)		(5)		(2)
Deferred taxes	1		(1)		(5)		(2)
Provision for income taxes	$	—	$	3	$	(5)	$	33

Schedule of Net Operating Loss And Tax Credit Carryovers

Pursuant to an intercompany tax sharing agreement, to the extent Ambac Assurance generates taxable income after September 30, 2011, which is offset with "Allocated NOLs" of $3,650, it is obligated to make payments (“Tolling Payments”), subject to certain credits, to AFG in accordance with the following NOL usage table, where the “Applicable Percentage” is applied to the aggregate amount of federal income tax liability that would have been paid if the Allocated NOLs were not available. Pursuant to the Closing Agreement between Ambac and the Internal Revenue Service ("IRS"), the IRS will receive 12.5% of Tier C and 17.5% of Tier D payments, if made.

NOL Usage Table

NOL Usage Tier

Allocated NOLs

Applicable
Percentage

The first

$479

15%

The next

$1,057

after Tier A

40%

The next

$1,057

after Tier B

10%

The next

$1,057

after Tier C

15%

As of December 31, 2018, Ambac Assurance generated cumulative taxable income of $1,508, leaving $2,142 of the $3,650 Allocated NOLs subject to Tolling Payments. For the year ended December 31, 2019, and nine months ended September 30, 2020, Ambac Assurance generated NOLs of approximately $143 and $197, respectively, which will need to be utilized before any new Tolling Payments will be generated.

If not utilized, the NOLs will begin expiring in 2029, and will fully expire in 2040, with the exception of the tax loss generated during the nine months ended September 30, 2020, of approximately $196, which if Ambac remains in a loss position at year end 2020, will expire in 2041.