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Income Taxes | 12 Months Ended
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Dec. 31, 2016
Income Tax Disclosure [Abstract] |
Income taxes | Note 14 - Income taxes: The provision for income taxes and the difference between such provision for income taxes, the amount that would be expected using the U.S. federal statutory income tax rate of 35% and the comprehensive provision for income taxes are presented below.
| Years ended December 31, |
| 2014 |  |  | 2015 |  |  | 2016 |
| (In millions) |
Expected tax expense (benefit), at U.S. federal statutory income tax rate of 35% | $ | 12.1 |  |  | $ | (18.0 | ) |  | $ | 4.9 |
Rate differences on equity in earnings (losses) of Kronos |  | (7.4 | ) |  |  | (7.4 | ) |  |  | (7.4 | )
Adjustment to the reserve for uncertain tax positions, net |  | - |  |  |  | (3.0 | ) |  |  | - |
U.S. state income taxes and other, net |  | .3 |  |  |  | (.2 | ) |  |  | (.3 | )
Income tax expense (benefit) | $ | 5.0 |  |  | $ | (28.6 | ) |  | $ | (2.8 | )
Components of income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |
Currently payable (receivable): | $ | .8 |  |  | $ | .1 |  |  | $ | 1.5 |
Deferred income tax expense (benefit) |  | 4.2 |  |  |  | (28.7 | ) |  |  | (4.3 | )
Income tax expense (benefit) | $ | 5.0 |  |  | $ | (28.6 | ) |  | $ | (2.8 | )
Comprehensive provision for income taxes (benefit) allocable to: |  |  |  |  |  |  |  |  |  |  |
Income (loss) from continuing operations | $ | 5.0 |  |  | $ | (28.6 | ) |  | $ | (2.8 | )
Other comprehensive income (loss): |  |  |  |  |  |  |  |  |  |  |
Marketable securities |  | (57.6 | ) |  |  | (25.3 | ) |  |  | 10.9 |
Currency translation |  | (11.0 | ) |  |  | (9.8 | ) |  |  | (1.8 | )
Interest rate swap |  | - |  |  |  | (.2 | ) |  |  | - |
Pension plans |  | (10.0 | ) |  |  | 1.4 |  |  |  | (2.1 | )
OPEB plans |  | (.5 | ) |  |  | (.2 | ) |  |  | (.2 | )
Total | $ | (74.1 | ) |  | $ | (62.7 | ) |  | $ | 4.0 |
The components of the net deferred tax liability at December 31, 2015 and 2016 are summarized in the following table.
| Years ended December 31, |
| 2015 |  |  | 2016 |
| Assets |  |  | Liabilities |  |  | Assets |  |  | Liabilities |
| (In millions) |
Tax effect of temporary differences related to: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Inventories | $ | .5 |  |  | $ | - |  |  | $ | .5 |  |  | $ | - |
Marketable securities |  | - |  |  |  | (6.4 | ) |  |  | - |  |  |  | (17.0 | )
Property and equipment |  | - |  |  |  | (4.5 | ) |  |  | - |  |  |  | (4.4 | )
Accrued OPEB costs |  | 1.1 |  |  |  | - |  |  |  | 1.0 |  |  |  | - |
Accrued pension costs |  | 4.6 |  |  |  | - |  |  |  | 4.2 |  |  |  | - |
Accrued employee benefits |  | 2.0 |  |  |  | - |  |  |  | 1.9 |  |  |  | - |
Accrued environmental liabilities |  | 39.9 |  |  |  | - |  |  |  | 41.1 |  |  |  | - |
Goodwill |  | - |  |  |  | (2.6 | ) |  |  | - |  |  |  | (2.6 | )
Other accrued liabilities and deductible differences |  | .4 |  |  |  | - |  |  |  | .2 |  |  |  | - |
Other taxable differences |  | - |  |  |  | (4.3 | ) |  |  | - |  |  |  | (3.3 | )
Investment in Kronos Worldwide, Inc. |  | - |  |  |  | (56.2 | ) |  |  | - |  |  |  | (49.0 | )
Tax loss and tax credit carryforwards |  | .5 |  |  |  | - |  |  |  | - |  |  |  | - |
Adjusted gross deferred tax assets (liabilities) |  | 49.0 |  |  |  | (74.0 | ) |  |  | 48.9 |  |  |  | (76.3 | )
Netting of items by tax jurisdiction |  | (49.0 | ) |  |  | 49.0 |  |  |  | (48.9 | ) |  |  | 48.9 |
Net noncurrent deferred tax asset (liability) | $ | - |  |  | $ | (25.0 | ) |  | $ | - |  |  | $ | (27.4 | )
In accordance with GAAP, we recognize deferred income taxes on our undistributed equity in earnings (losses) of Kronos. Because we and Kronos are part of the same U.S. federal income tax group, any dividends we receive from Kronos are nontaxable to us. Accordingly, we do not recognize and we are not required to pay income taxes on dividends from Kronos. We received aggregate dividends from Kronos of $21.1 million in each of 2014, 2015 and 2016. See Note 6. The amounts shown in the above table of our income tax rate reconciliation for rate differences on equity in earnings (losses) of Kronos represents the benefit associated with such non-taxability of the dividends we receive from Kronos, as it relates to the amount of deferred income taxes we recognize on our undistributed equity in earnings (losses) of Kronos. Kronos has substantial net operating losses in Germany and Belgium, the benefit of which Kronos had previously recognized under the more-likely-than-not recognition criteria. In the second quarter of 2015, Kronos determined that such losses did not meet the more-likely-than-not recognition criteria, and as a result Kronos recognized a non-cash deferred income tax expense of $150.3 million in the second quarter of 2015 as a valuation allowance against Kronos’ net deferred income tax assets in such jurisdictions. Kronos recognized an additional $8.7 million non-cash deferred income tax asset valuation allowance during the second half of 2015. During 2016, Kronos recognized an aggregate $2.2 million non-cash tax benefit as the result of a net decrease in such deferred income tax valuation allowance, as the impact of utilizing a portion of its German NOLs during such period more than offset the impact of additional losses recognized by Kronos’ Belgian operations during such period. In addition to the aggregate $159.0 million increase and $2.2 million decrease in the deferred income tax asset valuation allowance recognized as part of the provision for income taxes in 2015 and 2016, respectively, the deferred income tax asset valuation allowance also increased by an aggregate of $9.8 million in 2015 and $6.7 million in 2016 due to amounts recognized in other comprehensive income. The rate difference related to our equity in losses of Kronos in 2015 and 2016 includes our equity in such non-cash deferred income tax expenses recognized by Kronos. Tax authorities are examining certain of our U.S. and non-U.S. tax returns, including those of Kronos and tax authorities have or may propose tax deficiencies, including penalties and interest. Because of the inherent uncertainties involved in settlement initiatives and court and tax proceedings, we cannot guarantee that these tax matters will be resolved in our favor, and therefore our potential exposure, if any, is also uncertain.
| • | In 2011 and 2012 Kronos received notices of re-assessment from the Canadian federal and provincial tax authorities related to the years 2002 through 2004. Kronos objected to the re-assessments and believed the position was without merit. Accordingly, Kronos appealed the re-assessments and in connection with such appeal Kronos was required to post letters of credit aggregating Cdn. $7.9 million. In 2014, the Appeals Division of the Canadian Revenue Authority ruled in our favor and reversed in their entirety such notices of re-assessment. As a result, Kronos recognized a non-cash income tax benefit of $3.0 million related to the release of a portion of its reserve for uncertain tax positions in 2014 related to the completion of this Canadian income tax audit. In addition, the related letters of credit have been cancelled.
| • | Also during 2014, Kronos recognized a non-cash income tax benefit of $3.1 million related to the release of a portion of its reserve for uncertain tax positions in conjunction with the completion of an audit of our U.S. income tax return for 2009.
| • | As a result of ongoing audits in certain jurisdictions, in 2008 Kronos filed Advance Pricing Agreement Requests with the tax authorities in the U.S., Canada and Germany. These requests have been under review with the respective tax authorities since 2008 and prior to 2016, it was uncertain whether an agreement would be reached between the tax authorities and whether Kronos would agree to execute and finalize such agreements. During 2016, Contran, as the ultimate parent of our U.S. Consolidated income tax group, executed and finalized an Advance Pricing Agreement with the U.S. Internal Revenue Service and our Canadian subsidiary executed and finalized an Advance Pricing Agreement with the Competent Authority for Canada (collectively, the “U.S.-Canada APA”) effective for tax years 2005 - 2015. Pursuant to the terms of the U.S.-Canada APA, the U.S. and Canadian tax authorities agreed to certain prior year changes to taxable income of our U.S. and Canadian subsidiaries. As a result of such agreed-upon changes, Kronos recognized a $3.4 million current U.S. income tax benefit in 2016. In addition, our Canadian subsidiary will incur a cash income tax payment of approximately CAD $3 million (USD $2.3 million) as a result of the U.S.-Canada APA, but such payment was fully offset by previously provided accruals (such USD $2.3 million has not been paid as of December 31, 2016, and is classified as part of income taxes payable at such date). Kronos currently expects the Advance Pricing Agreement between Canada and Germany (collectively, the “Canada-Germany APA”) to be executed and finalized within the next twelve months. Kronos believes it has adequate accruals to cover any cash income tax payment which might result from the finalization of the Canada-Germany APA, and accordingly Kronos does not expect the execution of such APA to have a material adverse effect on its consolidated financial position, results of operations or liquidity.
We believe that 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. The following table shows the changes in the amount of our uncertain tax positions (exclusive of the effect of interest and penalties) during 2014, 2015 and 2016:
| December 31, |
| 2014 |  |  | 2015 |  |  | 2016 |
| (In millions) |
Unrecognized liabilities: |  |  |  |  |  |  |  |  |  |  |
Balance at the beginning of the period | $ | 16.8 |  |  | $ | 16.8 |  |  | $ | 12.2 |
Lapse of applicable statute of limitations |  | - |  |  |  | (4.6 | ) |  |  | - |
Balance at the end of the period | $ | 16.8 |  |  | $ | 12.2 |  |  | $ | 12.2 |
In the first quarter of 2015, we recognized a non-cash income tax benefit of $3.0 million related to the release of a portion of our reserve for uncertain tax positions due to the expiration of the applicable statute of limitations. We currently estimate that our unrecognized tax benefits will not change materially during the next twelve months. If our uncertain tax positions were recognized, a benefit of $15.2 million would affect our effective income tax rate in 2014, a benefit of $12.2 million would affect our rate in 2015 and 2016. We accrue interest and penalties on our uncertain tax positions as a component of our provision for income taxes. The amount of interest and penalties we accrued during 2014, 2015 and 2016 was not material. We and Contran file income tax returns in U.S. federal and various state and local jurisdictions. Our U.S. income tax returns prior to 2013 are generally considered closed to examination by applicable tax authorities.

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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