The provision for income taxes and the difference between such provision for income taxes and the amount that would be expected using the U.S. federal statutory income tax rate are presented below.

	Years ended December 31,
	2018			2019			2020
	(In millions)
Expected tax expense (benefit), at U.S. federal statutory income tax rate of 21%	$	(11.4	)	$	6.0		$	2.9
Rate differences on equity in earnings of Kronos, net of dividends		(5.0	)		(5.3	)		(5.3	)
Change in federal tax rate, net		.8			-			-
U.S. state income taxes and other, net		.2			(.1	)		(.1	)
Income tax expense (benefit)	$	(15.4	)	$	.6		$	(2.5	)

Components of income tax expense (benefit):
Currently payable (receivable)	$	(.2	)	$	.2		$	-
Deferred income tax expense (benefit)		(15.2	)		.4			(2.5	)
Income tax expense (benefit)	$	(15.4	)	$	.6		$	(2.5	)

Comprehensive provision for income taxes (benefit) allocable to:
Income (loss) from continuing operations	$	(15.4	)	$	.6		$	(2.5	)
Additional paid-in capital		-			(.2	)		(.1	)
Other comprehensive income (loss):
Currency translation		(2.1	)		(.1	)		.9
Pension plans		(.6	)		(.8	)		(.7	)
OPEB plans		-			-			(.1	)
Total	$	(18.1	)	$	(.5	)	$	(2.5	)

The components of the net deferred tax liability at December 31, 2019 and 2020 are summarized in the following table.

	December 31,
	2019						2020
	Assets			Liabilities			Assets			Liabilities
	(In millions)
Tax effect of temporary differences related to:
Inventories	$	.4		$	-		$	.4		$	-
Marketable securities		-			(5.4	)		-			(3.6	)
Property and equipment		-			(2.8	)		-			(2.6	)
Accrued OPEB costs		.3			-			.3			-
Accrued pension costs		.7			-			.5			-
Accrued employee benefits		1.2			-			1.1			-
Accrued environmental liabilities		31.7			-			29.1			-
Goodwill		-			(1.7	)		-			(1.7	)
Other accrued liabilities and deductible differences		.2			-			-			-
Other taxable differences		-			(2.3	)		-			(2.3	)
Investment in Kronos Worldwide, Inc.		-			(56.3	)		-			(55.0	)
Adjusted gross deferred tax assets (liabilities)		34.5			(68.5	)		31.4			(65.2	)
Netting of items by tax jurisdiction		(34.5	)		34.5			(31.4	)		31.4
Net noncurrent deferred tax liability	$	-		$	(34.0	)	$	-		$	(33.8	)

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 $23.9 million in 2018 and $25.4 million in each of 2019 and 2020. See Note 6. The amounts shown in the table above of our income tax rate reconciliation for rate differences on equity in earnings (losses) of Kronos represent the benefit associated with the nontaxable dividends we receive from Kronos compared to the amount of deferred income taxes we recognize on our undistributed equity in earnings (losses) of Kronos.

At December 31, 2020, we had NOL carryforwards for federal income tax purposes of approximately $26.6 million all of which have an indefinite carryforward period subject to an 80% annual usage limitation. Our deferred tax asset for such NOL carryforward is net of a portion of our uncertain tax positions as discussed below.

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.

At December 31, 2018, 2019, and 2020, the gross amount of our uncertain tax positions (exclusive of the effect of interest and penalties) was $7.3 million, and there was no change in such amount during the past three years. Prior to 2007, we made certain pro-rata distributions to our stockholders in the form of Kronos common stock and we recognized a taxable gain related to such distributions. Our uncertain tax positions are attributable to such prior period distribution of Kronos common stock. As discussed in Note 1, we are part of the Contran Tax Group and we have not paid this liability because Contran has not paid the liability to the applicable tax authority. This liability would be payable by Contran to the applicable tax authority if the shares of Kronos common stock were to be sold or otherwise disposed outside of the Contran Tax Group. At December 31, 2020, $5.6 million of our uncertain tax position is classified as a component of our noncurrent deferred tax liability. If our uncertain tax position at December 31, 2020 was recognized, a benefit of $7.3 million would affect our effective income tax rate. We currently estimate that our unrecognized tax benefits will not change materially during the next twelve months.

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 2017 are generally considered closed to examination by applicable tax authorities.

On March 27, 2020, the “Coronavirus Aid, Relief and Economic Security (CARES) Act” was signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, modifications to net operating loss carryovers and carrybacks, modifications to the limitation of business interest for 2019 and 2020 and technical corrections to tax depreciation methods for qualified improvement property. We have evaluated the relevant provisions of the CARES Act and do not expect the NOL carryback provisions to result in a cash tax benefit to us because we do not have any prior year refundable income taxes and other provisions of the CARES Act will not have a material impact on our tax provision.

Kronos has substantial net operating loss (NOL) carryforwards in Germany (the equivalent of $531 million for German corporate tax purposes at December 31, 2020) and in Belgium (the equivalent of $20 million for Belgian corporate tax purposes at December 31, 2020). At December 31, 2020, Kronos has concluded that no deferred income tax asset valuation allowance is required to be recognized with respect to such carryforwards, principally because (i) such carryforwards have an indefinite carryforward period, (ii) Kronos has utilized a portion of such carryforwards during the most recent three-year period and (iii) Kronos currently expects to utilize the remainder of such carryforwards over the long term. However, prior to the complete utilization of such carryforwards, if Kronos were to generate additional losses in its German or Belgian operations for an extended period of time, or if applicable law were to change such that the carryforward period was no longer indefinite, it is possible that Kronos might conclude the benefit of such carryforwards would no longer meet the more-likely-than-not recognition criteria, at which point Kronos would be required to recognize a valuation allowance against some or all of the then-remaining tax benefit associated with the carryforwards.

Prior to the enactment of the 2017 Tax Act, the undistributed earnings of Kronos’ European subsidiaries were deemed to be permanently reinvested (Kronos had not made a similar determination with respect to the undistributed earnings of its Canadian subsidiary). Pursuant to the one-time repatriation tax (Transition Tax) provisions of the 2017 Tax Act which imposed a one-time repatriation tax on post-1986 undistributed earnings, Kronos recognized a provisional current income tax expense of $76.2 million in the fourth quarter of 2017 based on information available at that date. During the third quarter of 2018, in conjunction with finalizing its federal income tax return and based on additional information that became available (including proposed regulations issued by the IRS in August 2018 with respect to the Transition Tax), Kronos recognized a provisional income tax benefit of $1.7 million which amount is recorded as a measurement-period adjustment, reducing the provisional income tax expense recognized in the fourth quarter of 2017. Kronos elected to pay such tax over an eight year period beginning in 2018. At December 31, 2020 the balance of its unpaid Transition Tax $56.6 million, which will be paid in annual installments over the remainder of the eight year period. Of such $56.6 million, $50.6 million is recorded as a noncurrent payable to affiliate (income taxes payable to Valhi) classified as a noncurrent liability in its Consolidated Balance Sheet at December 31, 2020, and $6.0 million is included with its current payable to affiliate (income taxes payable to Valhi) classified as a current liability (a portion of its noncurrent income tax payable to affiliate was reclassified to its current payable to affiliate for the portion of its 2020 Transition Tax installment due within the next twelve months).

In the fourth quarter of 2019, Kronos recognized an income tax benefit of $3.0 million primarily related to the favorable settlement of a prior year tax matter in Germany, with $1.5 million recognized as a current cash tax benefit and $1.5 million recognized as a non-cash deferred income tax benefit related to an increase to its German net operating loss carryforward. In addition, Kronos recognized a non-cash deferred income tax expense of $5.5 million primarily related to the revaluation of its net deferred income tax asset in Germany resulting from a decrease in the German trade tax rate.

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. 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 the first quarter of 2018, Kronos’ German subsidiary executed and finalized the related Advance Pricing Agreement with the Competent Authority for Germany effective for tax years 2005 - 2017. In the first quarter of 2018, Kronos recognized a net $1.4 million non-cash income tax benefit related to an APA tax settlement payment between its German and Canadian subsidiaries.

Tax authorities are examining certain of Kronos’ U.S. and non-U.S. tax returns and may propose tax deficiencies, including penalties and interest. Because of the inherent uncertainties involved in settlement initiatives and court and tax proceedings, Kronos cannot guarantee that these tax matters, if any, will be resolved in Kronos’ favor, and therefore its potential exposure, if any, is also uncertain. Kronos believes it has adequate accruals for additional taxes and related interest expense which could ultimately result from tax examinations. Kronos believes the ultimate disposition of tax examinations should not have a material adverse effect on its consolidated financial position, results of operations or liquidity.

Under the Cares Act, the modification to the business interest provisions increases the business interest limitation from 30% of adjusted taxable income to 50% of adjusted taxable income which increases Kronos’ allowable interest expense deduction for 2019 and 2020. Consequently, in the first quarter of 2020 Kronos recognized a cash tax benefit of $.5 million related to the reversal of the valuation allowance recognized in 2019 for the portion of the disallowed interest expense Kronos did not expect to fully utilize at December 31, 2019 and Kronos has considered such modifications in its 2020 provision for income taxes. Kronos has determined other provisions of the CARES Act did not have a material impact on its provision for income taxes in 2020.