The differences between the 21% statutory federal income tax rate and our effective income tax rate were as follows:


(Dollars in millions)	Three months ended September 30,														Nine months ended September 30,
	2020						2019						2020				2019
Tax at statutory rate:	$	129	21.0	%	$	62	21.0	%	$	38	21.0	%	$	355	21.0	%
Increase (decrease) resulting from:
Tax-exempt income from municipal bonds	(5)		(0.8)		(5)		(1.7)		(15)		(8.2)		(14)		(0.8)
Dividend received exclusion	(5)		(0.8)		(3)		(1.0)		(13)		(7.1)		(11)		(0.7)

Other	11		1.8		(8)		(2.7)		6		3.0		(10)		(0.6)
Provision for income taxes	$	130	21.2	%	$	46	15.6	%	$	16	8.7	%	$	320	18.9	%

The provision for federal income taxes is based upon filing a consolidated income tax return for the company and its domestic subsidiaries.

We continue to believe that after considering all positive and negative evidence of taxable income in the carryback and carryforward periods as permitted by law, it is more likely than not that all of the deferred tax assets on our U.S. domestic operations will be realized. As a result, we have no valuation allowance for our U.S. domestic operations as of September 30, 2020 and December 31, 2019. As more fully discussed below, we do carry a valuation allowance on the deferred tax assets related to Cincinnati Global.

During the first quarter of 2020, the IRS notified us they would be expanding their audit of tax year 2017 to include the tax year ended December 31, 2018.

In response to the novel coronavirus (SARS-CoV-2 or COVID-19), as more fully discussed in Note 1, Accounting Policies, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law on March 27, 2020. We have evaluated the CARES Act and believe any impact to our financial statements will be immaterial.

As of September 30, 2020 and December 31, 2019, we had a gross unrecognized tax benefit of $34 million. There were no changes to this amount during the first nine months of 2020. It is reasonably possible that within the next 12 months, our unrecognized tax benefit could change when the IRS completes its examination of the tax year ended December 31, 2018.

As a result of operations for the three and nine months ended September 30, 2020, Cincinnati Global, our London-based global specialty underwriter, increased their net deferred assets $15 million and $13 million with an offsetting increase of $15 million and $13 million to their valuation allowance. As of September 30, 2020, Cincinnati Global had a net deferred tax asset of $54 million and an offsetting valuation allowance of $54 million.

Deferred tax assets are reduced by a valuation allowance when management believes it is more likely than not that some, or all, of the deferred tax assets will not be realized. After considering all positive and negative evidence related to the Cincinnati Global operations, we continue to believe it is appropriate to carry a valuation allowance as of September 30, 2020.

As of September 30, 2020, Cincinnati Global had operating loss carryforwards of $178 million in the United Kingdom. These Cincinnati Global losses can only be utilized within Cincinnati Global in the United Kingdom and cannot offset the income of our domestic operations in the United States. Other than the Cincinnati Global loss carryforwards, we had no other operating or capital loss carryforwards as of September 30, 2020.