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Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

Income tax expense was $72 million for the three months ended March 31, 2020, compared to income tax benefit of $132 million in the same period of 2019. For the three months ended March 31, 2020, the increase in tax expense from the prior period is due primarily to the impact of valuation allowances releases in the prior period, partially offset by overall higher level of earnings and related tax expense.

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

	Three Months Ended March 31,
Millions of dollars	2020				2019
Earnings (loss) before income taxes	$	219			$	342
Income tax expense (benefit) computed at United States statutory tax rate	46				72
Valuation allowances	1				(235		)
U.S. foreign income items, net of credits	3				7
Other	22				24
Income tax expense (benefit) computed at effective worldwide tax rates	$	72			$	(132	)

At the end of each interim period, we estimate 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. During the first quarter of 2019, we completed a $700 million bond offering for which the proceeds were used to refinance and recapitalize various entities in the EMEA region. Based upon existing transfer pricing policies, these actions are projected to provide sufficient future taxable income to realize the deferred tax assets. These actions injected additional internal capital into certain EMEA entities to meet local country capitalization requirements, as well as repaid all outstanding borrowings under the Whirlpool EMEA Finance Term Loan. As a result, we reduced the valuation allowance by $235 million during the first quarter of 2019.

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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

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