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Income Taxes
 9 Months Ended
Sep. 30, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
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,
2022202120222021
Tax at statutory rate:$(122)21.0 %$39 21.0 %$(416)21.0 %$383 21.0 %
Increase (decrease) resulting from:        
Tax-exempt income from municipal bonds(5)0.9 (5)(2.7)(15)0.8 (15)(0.8)
Dividend received exclusion(5)0.9 (5)(2.7)(15)0.8 (14)(0.8)
Release of unrecognized tax benefit(34)5.9 — — (34)1.7 — — 
Other5 (0.9)2 1.2 (1)— (6)(0.3)
Provision (benefit) for income taxes$(161)27.8 %$31 16.8 %$(481)24.3 %$348 19.1 %
 
The provision (benefit) 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 at September 30, 2022, and December 31, 2021. As more fully discussed below, we do carry a valuation allowance on the deferred tax assets related to Cincinnati Global Underwriting Ltd.SM (Cincinnati Global).

Enactment of the Inflation Reduction Act of 2022
The Inflation Reduction Act of 2022 (Tax Act) was enacted on August 16, 2022. Along with other changes, the Tax Act created a new corporate alternative minimum tax (AMT) for certain corporations based on 15% of adjusted financial statement income for the taxable year. In addition, the Tax Act imposes a 1% excise tax on corporate stock repurchases. The effective date of these two provisions is January 1, 2023. We do not expect the enactment of the Tax Act to have a material impact on our financial statements. Any excise tax incurred on corporate stock repurchases will be recognized as part of the cost basis of the treasury stock acquired and not reported as part of income tax expense.

Unrecognized Tax Benefits
During the current quarter, we received favorable guidance from the Internal Revenue Service (IRS) supporting our tax position related to our unrecognized tax benefit set up in 2018. As a result of this guidance, we released our $34 million gross unrecognized tax benefit liability at September 30, 2022. The $34 million release is recognized as an additional income tax benefit and is shown separately in our effective income tax rate reconciliation. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

(Dollars in millions)Three months ended September 30,Nine months ended September 30,
2022202120222021
Gross unrecognized tax benefits, beginning of period$34 $34 $34 $34 
Gross increase in prior year positions— — — — 
Gross decrease in prior year positions(34)— (34)— 
Gross increase in current year positions— — — — 
Settlements with tax authorities— — — — 
Lapse of statute of limitations— — — — 
Gross unrecognized tax benefits, end of period$— $34 $— $34 
During the current quarter, the Congressional Joint Committee on Taxation completed review of our 2017 tax return and related carryback claims with no change to our returns as filed. Our 2018 tax year remains open and we recently received notice from the IRS of their intent to audit tax year ended December 31, 2020.
Cincinnati Global
As a result of operations for the three and nine months ended September 30, 2022, Cincinnati Global increased its net deferred tax assets by $7 million and decreased it by $4 million with an offsetting increase of $7 million and decrease of $4 million to the valuation allowance. At September 30, 2022, Cincinnati Global had a net deferred tax asset of $49 million and an offsetting valuation allowance of $49 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, we continue to believe it is appropriate to carry a valuation allowance at September 30, 2022.
At September 30, 2022, and December 31, 2021, Cincinnati Global had operating loss carryforwards in the United States of $6 million and $8 million, respectively, and in the United Kingdom of $123 million and $130 million, respectively. These Cincinnati Global losses can only be utilized within the Cincinnati Global group in both the United States and in the United Kingdom and cannot offset the income of our domestic operations in the United States.