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Income Taxes | 12 Months Ended
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Dec. 31, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Income tax expense was $138 million, $550 million, and $186 million in 2018, 2017 and 2016, respectively. The following table summarizes the difference between an income tax benefit at the United States statutory rate of 21% in 2018, and 35% in 2017 and 2016, respectively, and the income tax expense at effective worldwide tax rates for the respective periods:
Millions of dollars |  | 2018 |  | 2017 |  | 2016
Earnings (loss) before income taxes |  |  |  |  |  |
United States |  | $ | 729 |  |  | $ | 671 |  |  | $ | 605 |
Foreign |  | (750 | ) |  | 216 |  |  | 509 |
Earnings (loss) before income taxes |  | (21 | ) |  | 887 |  |  | 1,114 |
Income tax (benefit) expense computed at United States statutory rate |  | (4 | ) |  | 310 |  |  | 390 |
U.S. government tax incentives |  | (11 | ) |  | (13 | ) |  | (9 | )
Foreign government tax incentives, including BEFIEX |  | (21 | ) |  | (29 | ) |  | (11 | )
Foreign tax rate differential |  | (24 | ) |  | (14 | ) |  | (50 | )
U.S. foreign tax credits |  | (260 | ) |  | 17 |  |  | (86 | )
Valuation allowances |  | 75 |  |  | (68 | ) |  | (121 | )
State and local taxes, net of federal tax benefit |  | 23 |  |  | 29 |  |  | 20 |
Foreign withholding taxes |  | 24 |  |  | 41 |  |  | 36 |
U.S. tax on foreign dividends and subpart F income |  | 72 |  |  | 12 |  |  | 63 |
Settlement of global tax audits |  | 72 |  |  | 48 |  |  | (40 | )
U.S. Transition Tax |  | 40 |  |  | 190 |  |  | — |
Changes in enacted tax rates |  | (54 | ) |  | 49 |  |  | 32 |
Nondeductible goodwill |  | 139 |  |  | — |  |  | — |
Nondeductible fines & penalties |  | 30 |  |  | — |  |  | — |
Other items, net |  | 37 |  |  | (22 | ) |  | (38 | )
Income tax computed at effective worldwide tax rates |  | $ | 138 |  |  | $ | 550 |  |  | $ | 186 |
Current and Deferred Tax Provision The following table summarizes our income tax (benefit) provision for 2018, 2017 and 2016:
| 2018 |  | 2017 |  | 2016
Millions of dollars | Current |  | Deferred |  | Current |  | Deferred |  | Current |  | Deferred
United States | $ | (70 | ) |  | $ | 120 |  |  | $ | 138 |  |  | $ | 386 |  |  | $ | 34 |  |  | $ | 120 |
Foreign | 182 |  |  | (119 | ) |  | 213 |  |  | (233 | ) |  | 167 |  |  | (154 | )
State and local | 12 |  |  | 13 |  |  | 12 |  |  | 34 |  |  | 7 |  |  | 12 |
| $ | 124 |  |  | $ | 14 |  |  | $ | 363 |  |  | $ | 187 |  |  | $ | 208 |  |  | $ | (22 | )
Total income tax expense |  |  | $ | 138 |  |  |  |  | $ | 550 |  |  |  |  | $ | 186 |
United States Government Tax Legislation On December 22, 2017, H.R.1 (the “Tax Cuts and Jobs Act”) was signed into law. Significant provisions impacting Whirlpool's 2017 and 2018 effective tax rate include the reduction in corporate tax rate from 35% to 21% effective in 2018, a one-time deemed repatriation (“Transition Tax”) on earnings of certain foreign subsidiaries that were previously tax deferred, and the creation of new taxes on certain foreign sourced earnings. As of December 31, 2017, pursuant to the SEC guidance under SAB118, the Company made a reasonable estimate of the provisional effects of the rate reduction on its existing deferred tax balances and the impact of the one-time Transition Tax. For the items for which the Company was able to determine a reasonable estimate, it recognized the following provisional impacts. The reduction in corporate tax rate resulted in a one-time tax expense in the amount of $49 million related to the revaluation of our U.S. net deferred tax asset. Transition Tax resulted in a one-time tax expense in the amount of $190 million. These amounts represented the Company's best estimate of the impact of the Tax Cuts and Jobs act, at that time. As of December 31, 2018, the Company has revised these estimated amounts and recognized an additional tax benefit in the amount of $54 million on the difference between the 2017 U.S. enacted tax rate of 35%, and the 2018 enacted tax rate of 21%, primarily related to a $350 million tax deductible pension plan contribution included on the Company's 2017 U.S. Corporation income tax return. The Company recognized additional tax expense of $95 million related to the Transition Tax, including $55 million of unrecognized tax benefits during the fourth quarter. As of December 31, 2018, we have recognized $285 million tax expense related to Transition Tax inclusive of the amount recorded during 2017. As of December 31, 2018, the Company has completed its accounting for the tax effects of the enactment of the Tax Cuts and Jobs Act; however, we continue to expect the United States Treasury to issue regulations that could have a material financial statement impact on the Company's effective tax rate in future periods. In addition, to the extent there are settlements in the future for certain foreign unrecognized tax benefits, the Transition Tax may also be revised in future period. United States Tax on Foreign Dividends We have historically reinvested all unremitted earnings of the majority of our foreign subsidiaries and affiliates, and therefore have not recognized any U.S. deferred tax liability on those earnings. However, upon the enactment of the Tax Cuts and Jobs Act, the unremitted earnings and profits of our foreign subsidiaries and affiliates, subsequent to 1986, are subject to U.S. tax under the Transition Tax provision. The Company has estimated U.S. GAAP earnings as of December 31, 2018 of $2.8 billion. Under the Transition Tax provision, the Company recognized a deemed remittance of $3.3 billion. The Company had cash and cash equivalents of approximately $1.5 billion at December 31, 2018, of which substantially all was held by subsidiaries in foreign countries. Our intent is to permanently reinvest these funds outside of the United States and our current plans do not demonstrate a need to repatriate the cash to fund our U.S. operations. However, if these funds were repatriated, we would be required to accrue and pay applicable United States taxes (if any) and withholding taxes payable to various countries. It is not practicable to estimate the tax impact of the reversal of the outside basis difference, or the repatriation of cash due to the complexity of its hypothetical calculation. Valuation Allowances At December 31, 2018, we had net operating loss carryforwards of $4.9 billion, $801 million of which were U.S. state net operating loss carryforwards. Of the total net operating loss carryforwards, $3.2 billion do not expire, with substantially all of the remaining carryforwards expiring in various years through 2038. As of December 31, 2018, we had $875 million of United States general business credit carryforwards available to offset future payments of federal income taxes, expiring between 2029 and 2038. We routinely review the future realization of deferred tax assets based on projected future reversal of taxable temporary differences, available tax planning strategies and projected future taxable income. We have recorded a valuation allowance to reflect the net estimated amount of certain deferred tax assets associated with net operating loss and other deferred tax assets we believe will be realized. Our recorded valuation allowance of $348 million at December 31, 2018 consists of $286 million of net operating loss carryforward deferred tax assets and $62 million of other deferred tax assets. Our recorded valuation allowance was $178 million at December 31, 2017 and consisted of $156 million of net operating loss carryforward deferred tax assets and $22 million of other deferred tax assets. The increase in our valuation allowance includes $75 million recognized in net earnings, with the remaining change related to reclassification within our net deferred tax asset. We believe that it is more likely than not that we will realize the benefit of existing deferred tax assets, net of valuation allowances mentioned above. Settlement of Global Tax Audits We are in various stages of audits by certain governmental tax authorities. We establish liabilities for the difference between tax return provisions and the benefits recognized in our financial statements. Such amounts represent a reasonable provision for taxes ultimately expected to be paid, and may need to be adjusted over time as more information becomes known. We are no longer subject to any significant United States federal tax examinations for the years before 2009, or any state, local or foreign income tax examinations by tax authorities for years before 2004. Deferred Tax Liabilities and Assets Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes. The following table summarizes the significant components of our deferred tax liabilities and assets at December 31, 2018 and 2017:
Millions of dollars |  | 2018 |  | 2017
Deferred tax liabilities |  |  |  |
Intangibles |  | $ | 450 |  |  | $ | 610 |
Property, net |  | 195 |  |  | 185 |
LIFO inventory |  | 37 |  |  | 38 |
Other |  | 262 |  |  | 177 |
Total deferred tax liabilities |  | 944 |  |  | 1,010 |
Deferred tax assets |  |  |  |
U.S. general business credit carryforwards, including Energy Tax Credits |  | 875 |  |  | 927 |
Pensions |  | 144 |  |  | 220 |
Loss carryforwards |  | 1,051 |  |  | 880 |
Postretirement obligations |  | 99 |  |  | 109 |
Research and development capitalization |  | 135 |  |  | 129 |
Employee payroll and benefits |  | 98 |  |  | 56 |
Accrued expenses |  | 154 |  |  | 170 |
Product warranty accrual |  | 55 |  |  | 55 |
Receivable and inventory allowances |  | 85 |  |  | 56 |
Other |  | 536 |  |  | 521 |
Total deferred tax assets |  | 3,232 |  |  | 3,123 |
Valuation allowances for deferred tax assets |  | (348 | ) |  | (178 | )
Deferred tax assets, net of valuation allowances |  | 2,884 |  |  | 2,945 |
Net deferred tax assets |  | $ | 1,940 |  |  | $ | 1,935 |
Unrecognized Tax Benefits The following table represents a reconciliation of the beginning and ending amount of unrecognized tax benefits that if recognized would impact the effective tax rate, excluding federal benefits of state and local tax positions, and interest and penalties:
Millions of dollars |  | 2018 |  | 2017 |  | 2016
Balance, January 1 |  | $ | 219 |  |  | $ | 102 |  |  | $ | 143 |
Additions for tax positions of the current year |  | 21 |  |  | 25 |  |  | 14 |
Additions for tax positions of prior years |  | 60 |  |  | 110 |  |  | 1 |
Reductions for tax positions of prior years |  | (5 | ) |  | (1 | ) |  | (33 | )
Settlements during the period |  | (8 | ) |  | (10 | ) |  | (20 | )
Lapses of applicable statute of limitation |  | (9 | ) |  | (7 | ) |  | (3 | )
Balance, December 31 |  | $ | 278 |  |  | $ | 219 |  |  | $ | 102 |
Interest and penalties associated with unrecognized tax benefit resulted in a net expense of $2 million as of December 31, 2018, a net expense of $8 million in 2017, and a net benefit of $19 million in 2016. We have accrued a total of $46 million, $45 million and $42 million at December 31, 2018, 2017 and 2016, respectively. It is reasonably possible that certain unrecognized tax benefits of $15 million could be settled with various related jurisdictions during the next 12 months.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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