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ITEM 8 / NOTE 24. INCOME TAXES.....................................................................................................................................................................................For the year ended December 31, 2012, the effective tax rate on pre-tax income from continuing operations was16.8 percent. The effective tax rate for the year ended December 31, 2012, attributable to continuing operationsdiffers from the statutory rate primarily due to tax benefits of $1.9 billion related to a decrease in the life-insurancebusinesscapital loss carryforward valuation allowance and $302 million associated with tax exempt interest income.These items were partially offset by charges of $586 million related to uncertain tax positions and $172 millionassociated with the effect of foreign operations.For the year ended December 31, 2011, the effective tax rate on pre-tax income from continuing operations was notmeaningful, due to the significant effect of releasing approximately $18.4 billion of the deferred tax asset valuationallowance. Other factors that contributed to the difference from the statutory rate included tax benefits of $454 millionassociated with tax exempt interest income, $386 million associated with the effect of foreign operations, and$224 million related to our investment in subsidiaries and partnerships.For the year ended December 31, 2010, the effective tax rate on pre-tax income from continuing operations was34.5 percent. The effective tax rate for the year ended December 31, 2010, attributable to continuing operationsdiffers from the statutory rate primarily due to tax benefits of $1.3 billion associated with our investment insubsidiaries and partnerships, principally the AIA SPV which is treated as a partnership for U.S. tax purposes, and$587 million associated with tax exempt interest, partially offset by an increase in the valuation allowance attributableto continuing operations of $1.4 billion.The following table presents the components of the net deferred tax assets (liabilities):December 31,(in millions) 2012 2011Deferred tax assets:Losses and tax credit carryforwards $ 25,359 $ 28,223Unrealized loss on investments 3,365 2,436Accruals not currently deductible, and other 4,499 6,431Investments in foreign subsidiaries and joint ventures 1,435 1,432Loss reserve discount 1,235 1,260Loan loss and other reserves 547 877Unearned premium reserve reduction 1,145 1,696Employee benefits 1,483 1,217Total deferred tax assets 39,068 43,572Deferred tax liabilities:Adjustment to life policy reserves (1,817) (1,978)Deferred policy acquisition costs (2,816) (3,340)Flight equipment, fixed assets and intangible assets (2,015) (4,530)Unrealized gains related to available for sale debt securities (7,464) (4,010)Other (225) (378)Total deferred tax liabilities (14,337) (14,236)Net deferred tax assets before valuation allowance 24,731 29,336Valuation allowance (8,036) (11,047)Net deferred tax assets (liabilities) $ 16,695 $ 18,289The following table presents our U.S. consolidated income tax group tax losses and credits carryforwards asof December 31, 2012 on a tax return basis.December 31, 2012 Tax Expiration(in millions) Gross Effected PeriodsNet operating loss carryforwards $ 40,872 $ 14,305 2025 - 2031Capital loss carryforwards – Life 17,249 6,037 2013 - 2014Capital loss carryforwards – Non-Life 88 31 2013Foreign tax credit carryforwards – 5,549 2015 - 2022Other carryforwards and other – 515 VariousTotal AIG U.S. consolidated income tax group tax losses and credits carryforwards $ 26,437..................................................................................................................................................................................................................................AIG 2012 Form 10-K 331