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Income Taxes | 6 Months Ended
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Jun. 30, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | Note 13—Income taxes:
| Three months ended June 30, |  |  | Six months ended June 30, |
| 2018 |  |  | 2019 |  |  | 2018 |  |  | 2019 |
| (In millions) |
Expected tax expense, at U.S. federal statutory income tax rate of 21% | $ | 8.8 |  |  | $ | 6.6 |  |  | $ | 31.2 |  |  | $ | 15.5 |
Incremental net tax on earnings and losses of non-U.S., U.S. and non-tax group companies |  | 4.9 |  |  |  | — |  |  |  | 9.0 |  |  |  | (.2 | )
Non-U.S. tax rates |  | 7.9 |  |  |  | 2.3 |  |  |  | 14.9 |  |  |  | 4.6 |
Valuation allowance |  | 1.7 |  |  |  | 2.8 |  |  |  | 2.0 |  |  |  | 3.8 |
Global intangible low-tax income, net |  | — |  |  |  | .4 |  |  |  | — |  |  |  | 1.1 |
Adjustment to the reserve for uncertain tax positions, net |  | .3 |  |  |  | .5 |  |  |  | 1.9 |  |  |  | 1.0 |
Canada – Germany APA |  | — |  |  |  | — |  |  |  | (1.4 | ) |  |  | — |
U.S. state income taxes and other, net |  | (1.6 | ) |  |  | .4 |  |  |  | .6 |  |  |  | 1.4 |
Income tax expense | $ | 22.0 |  |  | $ | 13.0 |  |  | $ | 58.2 |  |  | $ | 27.2 |
Comprehensive provision for income taxes (benefit) allocable to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Income from continuing operations | $ | 22.0 |  |  | $ | 13.0 |  |  | $ | 58.2 |  |  | $ | 27.2 |
Discontinued operations |  | (.4 | ) |  |  | — |  |  |  | 19.8 |  |  |  | — |
Retained earnings – change in accounting principle |  | — |  |  |  | — |  |  |  | 1.1 |  |  |  | — |
Other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Currency translation |  | (3.3 | ) |  |  | .8 |  |  |  | (1.9 | ) |  |  | .8 |
Pension plans |  | 1.5 |  |  |  | 1.5 |  |  |  | 3.0 |  |  |  | 3.1 |
OPEB plans |  | (.1 | ) |  |  | (.1 | ) |  |  | (.2 | ) |  |  | (.2 | )
Total | $ | 19.7 |  |  | $ | 15.2 |  |  | $ | 80.0 |  |  | $ | 30.9 |
The amount shown in the above table of our income tax rate reconciliation for non-U.S. tax rates represents the result determined by multiplying the pre-tax earnings or losses of each of our non-U.S. subsidiaries by the difference between the applicable statutory income tax rate for each non-U.S. jurisdiction and the U.S. federal statutory tax rate of 21%. The amount shown on such table for incremental net tax expense (benefit) on earnings and losses on non-U.S., U.S. and non-tax group companies includes, as applicable, (i) deferred state and foreign income taxes (or deferred income tax benefits) and deferred withholding taxes, as applicable, associated with the current-year change in the aggregate amount of undistributed earnings of all of our non-U.S. subsidiaries, which earnings are not permanently reinvested , (ii) current U.S. income taxes (or current income tax benefit) attributable to current-year income (losses) of one of Kronos’ non-U.S. subsidiaries, which subsidiary is treated as a dual resident for U.S. income tax purposes, (iii) deferred income taxes associated with our direct investment in Kronos and (iv) current and deferred income taxes associated with distributions and earnings from our investment in LandWell and BMI. We record global intangible low-tax income (GILTI) tax as a current-period expense when incurred under the period cost method. We have evaluated the tax impact of GILTI and base erosion anti abuse tax (BEAT) provisions and related U.S. tax credit provisions applicable to tax years beginning in 2018 based on the relevant statutes, including final GILTI and foreign tax credit regulations issued by the IRS in June 2019 which did not materially impact our determinations with respect to such items. None of our federal U.S. and non-U.S. tax returns are currently under examination. As a result of prior audits in certain jurisdictions, which are now settled, in 2008 Kronos filed Advance Pricing Agreement Requests with the tax authorities in the U.S., Canada and Germany. During the first quarter of 2018, Kronos’ German subsidiary executed and finalized the related Advance Pricing Agreement with the Competent Authority for Germany (the “Canada-Germany APA”) effective for tax years 2005 - 2017. In the first quarter of 2018, we recognized a net $1.4 million non-cash income tax benefit related to an APA tax settlement payment between Kronos’ German and Canadian subsidiaries. The 2017 Tax Act amended the rules limiting the deduction for business interest expense beginning in 2018. The limitation applies to all taxpayers, and our annual deduction for business interest expense is limited to the sum of our business interest income and 30% of our adjusted taxable income as defined under the 2017 Tax Act. Any business interest expense not allowed as a deduction as a result of the limitation may be carried forward indefinitely and is treated as interest paid in the carryforward year subject to the respective year’s limitation. We determined that our interest expense for 2018 and 2019 was limited under these provisions. The limitation in 2018 resulted in part because of the loss we recognized on the sale of WCS for income tax purposes and the limitation in 2019 is primarily attributable to lower earnings. We have concluded that we are required to recognize a non-cash deferred income tax asset valuation allowance under the more-likely-than-not recognition criteria with respect to the portion of our deferred tax asset attributable to the nondeductible amount of business interest expense carryforward. Consequently, our provision for income taxes includes a non-cash deferred income tax expense of $7.1 million in the first six months of 2018 and $3.8 million in the first six months of 2019 for the amount of such deferred income tax asset that we have determined does not meet the more-likely-than-not recognition criteria. In accordance with the ASC 740 guidance regarding intra-period allocation of income taxes, $5.1 million of such non-cash deferred income tax expense in 2018 is classified as part of the income taxes associated with the pre-tax gain we recognized for financial reporting purposes on the sale of WCS which is classified as part of discontinued operations as discussed in Note 3, and the remaining $2.0 million is classified as part of our provision for income taxes attributable to continuing operations. We believe we have adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations. We believe the ultimate disposition of tax examinations should not have a material adverse effect on our consolidated financial position, results of operations or liquidity. We currently estimate that our unrecognized tax benefits will decrease by approximately $3.7 million during the next twelve months primarily due to certain adjustments to our prior year returns and the expiration of certain statutes of limitations.

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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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