INCOME TAXES

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

Income tax expense was $37 million and $143 million for the three and six months ended June 30, 2022, compared to income tax expense of $94 million and $253 million in the same period of 2021. For the three and six months ended June 30, 2022, the changes in the effective tax rate from the prior period include overall lower level of earnings, impact of non deductible goodwill impairments, audits and settlements, prior year divestiture, and legal entity restructuring tax impacts.

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 June 30,				Six Months Ended June 30,
Millions of dollars	2022		2021		2022		2021
Earnings (Loss) before income taxes	$	(332)	$	674	$	95	$	1,273
Income tax expense (benefit) computed at United States statutory tax rate	(70)		142		20		267
Valuation allowances	(1)		(1)		6		2
Audit and Settlements	(29)		8		(26)		15
U.S. foreign income items, net of credits	(2)		—		(10)		7
Changes in enacted tax rates	—		(14)		—		(14)
Non deductible impairments	150		—		150		—
Divestiture tax impact	—		(21)		—		(21)
Legal entity restructuring tax impact	—		(46)		—		(46)
Other	(11)		26		3		43
Income tax expense (benefit) computed at effective worldwide tax rates	$	37	$	94	$	143	$	253

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.

Other Income Tax Matters

During its examination of Whirlpool’s 2009 U.S. federal income tax return, the IRS asserted that income earned by a Luxembourg subsidiary via its Mexican branch should be recognized as income on its 2009 U.S. federal income tax return. The Company believed the proposed assessment was without merit and contested the matter in United States Tax Court (US Tax Court). Both Whirlpool and the IRS moved for partial summary judgment on this issue. On May 5, 2020, the US Tax Court granted the IRS’s motion for partial summary judgment and denied Whirlpool’s.

The Company appealed the US Tax Court decision to the United States Court of Appeals for the Sixth Circuit, and, on December 6, 2021, the three-judge panel, in a divided decision, affirmed the U.S. Tax Court decision

(the "Ruling"). The Company recorded a reserve of $98 million in the fourth quarter of 2021, which represents the expected increase in the Company’s net income tax expense, plus interest, for 2009 through 2019, which represents all of the Company’s tax years that were affected by the Ruling. On January 20, 2022, the Company filed a petition for rehearing with the Sixth Circuit, which was denied on March 2, 2022. On June 30, 2022, the Company filed a petition for certiorari with the U.S. Supreme Court.