Income Tax (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Provision for income tax from continuing operations

The provision for income tax from continuing operations was as follows:

	Years Ended December 31,
	2019			2018			2017
	(In millions)
Current:
U.S. federal	$	(189	)	$	(207	)	$	(246	)
U.S. state and local	4			11			5
Non-U.S.	850			932			891
Subtotal	665			736			650
Deferred:
U.S. federal	(235		)	342			(2,373		)
Non-U.S.	456			101			253
Subtotal	221			443			(2,120		)
Provision for income tax expense (benefit)	$	886		$	1,179		$	(1,470	)

Income (loss) from continuing operations before income tax expense (benefit) from domestic and foreign operations

The Company’s income (loss) from continuing operations before income tax expense (benefit) was as follows:

	Years Ended December 31,
	2019		2018			2017
	(In millions)
Income (loss) from continuing operations:
U.S.	$	2,094	$	(803	)	$	684
Non-U.S.	4,701		7,110			2,852
Total	$	6,795	$	6,307		$	3,536

Income tax for continuing operations effective rate reconciliation

The reconciliation of the income tax provision at the U.S. statutory rate (21% in 2019 and 2018; 35% in 2017) to the provision for income tax as reported for continuing operations was as follows:

	Years Ended December 31,
	2019			2018			2017
	(In millions)
Tax provision at U.S. statutory rate	$	1,427		$	1,325		$	1,238
Tax effect of:
Dividend received deduction	(37		)	(35		)	(67		)
Tax-exempt income	(64		)	(29		)	(97		)
Prior year tax (1)	(179		)	(197		)	(27		)
Low income housing tax credits	(254		)	(284		)	(278		)
Other tax credits	(52		)	(79		)	(102		)
Foreign tax rate differential (2), (3), (4)	395			335			(95		)
Change in valuation allowance	(22		)	(2		)	(8		)
Separation tax benefits	—			—			(540		)
U.S. Tax Reform impact (5), (6), (7)	(326		)	78			(1,519		)
Other, net (8)	(2		)	67			25
Provision for income tax expense (benefit)	$	886		$	1,179		$	(1,470	)

__________________

(1) As discussed further below, prior year tax includes a non-cash benefit related to an uncertain tax position of $158 million and $168 million for the years ended December 31, 2019 and 2018, respectively.

(2) For the year ended December 31, 2019, foreign tax rate differential includes tax charges of $61 million from the definitive agreement to sell MetLife Hong Kong and $12 million related to the U.S. tax on Global Intangible Low-Taxed Income (“GILTI”), of which $35 million is a current year charge offset by a $23 million tax benefit revising the 2018 estimate.

(3) For the year ended December 31, 2018, foreign tax rate differential includes tax charges of $45 million related to GILTI, $17 million related to a tax adjustment in Chile and $13 million from changes in the valuation of the peso in Argentina.

(4) For the year ended December 31, 2017, foreign tax rate differential includes a net tax charge of $180 million as a result of repatriation. Included in the net tax charge of $180 million is a $444 million tax charge related to the repatriation of approximately $3.0 billion of pre-2017 earnings following the post-Separation review of the Company’s capital needs. This charge was partially offset by a $264 million tax benefit associated with dividends from other non-U.S. operations. This charge was recorded prior to U.S. Tax Reform.

(5) For the year ended December 31, 2019, U.S. Tax Reform impact includes a $317 million tax benefit related to the deemed repatriation transition tax and $9 million related to the effect of sequestration on the alternative minimum tax credit.

(6) For the year ended December 31, 2018, U.S. Tax Reform impact includes a $468 million tax charge related to the deemed repatriation transition tax, offset by a $390 million tax benefit related to the adjustment of deferred taxes due to the U.S. tax rate change. This excludes $12 million of tax provision at the U.S. statutory rate for a total tax reform charge of $66 million.

(7) For the year ended December 31, 2017, U.S. Tax Reform impact of ($1.5) billion excludes ($101) million of tax provision at the U.S. statutory rate for a total tax reform benefit of ($1.6) billion.

(8)

For the year ended December 31, 2018, other includes tax charges of $69 million related to the non-deductible loss incurred on the mark-to-market and exchange of FVO Brighthouse Common Stock and $18 million related to a non-deductible Patient Protection and Affordable Care Act excise tax, offset by a tax benefit of $36 million related to a non-cash transfer of assets from a wholly-owned U.K. subsidiary to its U.S. parent.

Impact of U.S. Tax Reform [Table Text Block]

The incremental financial statement impact related to U.S. Tax Reform was as follows:

	Years Ended December 31,
	2019			2018			2017
	(In millions)
Income (loss) from continuing operations before provision for income tax	$	—		$	(58	)	$	(289	)
Provision for income tax expense (benefit):
Deemed repatriation	(317		)	468			170
Deferred tax revaluation	(9		)	(402		)	(1,790		)
Total provision for income tax expense (benefit)	(326		)	66			(1,620		)
Income (loss) from continuing operations, net of income tax	326			(124		)	1,331
Income tax (expense) benefit related to items of other comprehensive income (loss)	—			—			144
Increase to net equity from U.S. Tax Reform	$	326		$	(124	)	$	1,475

Components of deferred tax assets and liabilities

Deferred income tax represents the tax effect of the differences between the book and tax bases of assets and liabilities. Net deferred income tax assets and liabilities consisted of the following at:

	December 31,
	2019			2018
	(In millions)
Deferred income tax assets:
Policyholder liabilities and receivables	$	3,635		$	3,558
Net operating loss carryforwards (1)	240			237
Employee benefits	692			705
Capital loss carryforwards	10			—
Tax credit carryforwards (2)	1,296			1,113
Litigation-related and government mandated	151			161
Other	127			365
Total gross deferred income tax assets	6,151			6,139
Less: Valuation allowance (1)	294			302
Total net deferred income tax assets	5,857			5,837
Deferred income tax liabilities:
Investments, including derivatives	4,170			3,854
Intangibles	1,181			1,256
Net unrealized investment gains	6,226			2,898
DAC	3,312			3,243
Total deferred income tax liabilities	14,889			11,251
Net deferred income tax asset (liability) (3)	$	(9,032	)	$	(5,414	)

__________________

(1) The Company has recorded a deferred tax asset of $240 million related to U.S. state and non-U.S. net operating loss carryforwards and an offsetting valuation allowance for the year ended December 31, 2019. Certain net operating loss carryforwards will expire between 2020 and 2039, whereas others have an unlimited carryforward period. The valuation allowance reflects management’s assessment, based on available information, that it is more likely than not that the deferred income tax asset for certain U.S. state and non-U.S. net operating loss carryforwards will not be realized. The tax benefit will be recognized when management believes that it is more likely than not that these deferred income tax assets are realizable.

(2) Tax credit carryforwards for the year ended December 31, 2019 primarily reflect general business credits expiring between 2036 and 2039 and are reduced by $113 million related to unrecognized tax benefits.

(3)

On the consolidated balance sheet at December 31, 2019, $9,097 million is reported in Deferred income tax liability for jurisdictions in a net deferred income tax liability position and $65 million of a deferred income tax asset is reported in Other assets for jurisdictions in a net deferred income tax asset position.

Reconciliation of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits was as follows:

	Years Ended December 31,
	2019			2018			2017
	(In millions)
Balance at January 1,	$	1,111		$	1,102		$	1,146
Additions for tax positions of prior years (1)	6			269			70
Reductions for tax positions of prior years (2)	(493		)	(195		)	(101		)
Additions for tax positions of current year (1)	13			226			33
Reductions for tax positions of current year	—			(3		)	(3		)
Settlements with tax authorities (3)	(381		)	(288		)	(43		)
Balance at December 31,	$	256		$	1,111		$	1,102
Unrecognized tax benefits that, if recognized, would impact the effective rate	$	194		$	1,046		$	1,073

__________________

(1) The increase in 2018 is primarily related to the deemed repatriation transition tax and related IRS regulations.

(2) The decreases are primarily related to non-cash benefits from tax audit settlements.

(3)

The decreases in 2019 and 2018 are primarily related to the tax audit settlement, of which $377 million and $284 million, respectively, was reclassified to the current income tax payable account.

Interest was as follows:

	Years Ended December 31,
	2019			2018			2017
	(In millions)
Interest expense (benefit) recognized on the consolidated statements of operations (1)	$	(179	)	$	(441	)	$	37
				December 31,
				2019			2018
				(In millions)
Interest included in other liabilities on the consolidated balance sheets				$	39		$	218

__________________

(1)

The decreases in 2019 and 2018 are primarily related to the tax audit settlement, of which $60 million and $168 million, respectively, was recorded in other expenses and $119 million and $273 million, respectively, was reclassified to the current income tax payable account.