INCOME TAXES

Income tax benefit was $132 million for the three months ended March 31, 2019 compared to income tax expense of $15 million in the same period of 2018. For the three months ended March 31, 2019, changes in the effective tax rate from the prior period include valuation allowance releases, partially offset by overall higher level of earnings and related tax expense.

The following table summarizes the difference between income tax (benefit) expense at the U.S. statutory rate of 21% and the income tax (benefit) expense at effective worldwide tax rates for the respective periods:



	Three Months Ended March 31,
Millions of dollars	2019			2018
Earnings before income taxes	$	342		$	109

Income tax (benefit) expense computed at United States statutory tax rate	72			23
Valuation allowances	(235		)	—
U.S. foreign income items, net of credits	7			(11		)
Other	24			3
Income tax (benefit) expense computed at effective worldwide tax rates	$	(132	)	$	15

At the end of each interim period, we make our best estimate of the effective tax rate expected to be applicable for the full fiscal year and the impact of discrete items, if any, and adjust the quarterly rate as necessary.

Valuation Allowances

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 reduced the valuation allowance to reflect the estimated amount of certain deferred tax assets associated with net operating losses and other deferred tax assets we believe are now more-likely-than-not to be realized. During the first quarter of 2019, upon completion of the $700 million bond offering, we used the proceeds to refinance and recapitalize various entities in our Europe, Middle East and Africa (“EMEA”) business unit. Based upon our existing transfer pricing policies, these actions are expected to provide sufficient future taxable income to realize the deferred tax assets. In addition, these actions inject additional internal capital into certain EMEA entities to meet local country capitalization requirements, repay all outstanding borrowings under the Whirlpool EMEA Finance Term Loan and prepare for the pending Embraco divestiture. Accordingly, we reduced the valuation allowance by $235 million during the first quarter of 2019.