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Analyzing Deloitte Tax Audit Of Metlife Inc.

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This memorandum was prepared for purposes of documenting Deloitte Tax audit of Metlife Inc.’s 2014 year-end tax provision and addresses (i) the reasonableness of the revised methodology that Metlife, Inc. has implemented for 2013 tax year with respect to allocating/apportioning expenses to foreign and U.S. source income for Foreign Tax Credit purposes, and (ii) whether the change in methodology from 2012 tax year to 2013 tax year constitutes a change in accounting method requiring the consent of the IRS.
II. Facts:

a. Overview

Metlife, Inc. (“Metlife”, ”Company”) is a multinational insurance company which carries operations both in the U.S. and in various other foreign jurisdictions. The taxable income that Metlife generates abroad through its subsidiaries is subject to income tax under the laws of those foreign jurisdictions within which the income is derived from. Under the U.S. worldwide taxation system, that same income is also subject to U.S. tax upon (deemed) repatriation to Metlife. The apparent result of the above is the double taxation of the income earned abroad. In order to alleviate this issue, the U.S. makes available to the taxpayer a Foreign Tax Credit (“FTC”) for foreign income taxes paid, subject to certain limitations. The calculation of the FTC is a complex process which is comprised of many steps, most of which are beyond the scope of this memorandum. The only step that this memorandum is concerned with is the allocation/apportionment of expenses to

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