Table of Contents Reconciliation of unrecognized tax benefits:  Years ended December 31, (Millions of dollars) 2020 2019 2018 Beginning balance $ 1,778 $ 1,796  $ 1,286  Additions for tax positions related to current year 44 72  61  Additions for tax positions related to prior years 46 112  461  Reductions for tax positions related to prior years (12) (201) (5) Reductions for settlements (94) —  (6) Reductions for expiration of statute of limitations (3) (1) (1) Ending balance $ 1,759 $ 1,778  $ 1,796  Amount that, if recognized, would impact the effective tax rate $ 1,657 $ 1,616  $ 1,716  Foreign currency impacts are included within each line as applicable. Includes cash payment or other reduction of assets to settle liability. 1 2 1 2 We classify interest and penalties on income taxes as a component of the provision for income taxes. We recognized a net provision for interest and penalties of $38 million, $43 million and $42 million during the years ended December 31, 2020, 2019 and 2018, respectively. The total amount of interest and penalties accrued was $264 million and $233 million as of December 31, 2020 and 2019, respectively. On January 31, 2018, we received a Revenue Agent’s Report from the IRS indicating the end of the field examination of our U.S. income tax returns for 2010 to 2012. In the audits of 2007 to 2012 including the impact of a loss carryback to 2005, the IRS has proposed to tax in the United States profits earned from certain parts transactions by Caterpillar SARL (CSARL), based on the IRS examination team’s application of the “substance- over-form” or “assignment-of-income” judicial doctrines. We are vigorously contesting the proposed increases to tax and penalties for these years of approximately $2.3 billion. We believe that the relevant transactions complied with applicable tax laws and did not violate judicial doctrines. We have filed U.S. income tax returns on this same basis for years after 2012. Based on the information currently available, we do not anticipate a significant change to our unrecognized tax benefits for this position within the next 12 months. We currently believe the ultimate disposition of this matter will not have a material adverse effect on our consolidated financial position, liquidity or results of operations. With the exception of a loss carryback to 2005, tax years prior to 2007 are generally no longer subject to U.S. tax assessment. In our major non- U.S. jurisdictions including Australia, Brazil, China, Germany, India, Japan, Mexico, Switzerland, Singapore and the U.K., tax years are typically subject to examination for three to ten years. Due to the uncertainty related to the timing and potential outcome of audits, we cannot estimate the range of reasonably possible change in unrecognized tax benefits in the next 12 months. Wholesale inventory receivables are receivables of Cat Financial that arise when Cat Financial provides financing for a dealer’s purchase of inventory. We include these receivables in Receivables—trade and other and Long-term receivables—trade and other in Statement 3 and were $1,233 million and $1,401 million, at December 31, 2020 and 2019, respectively. 7. Cat Financial Financing Activities A. Wholesale inventory receivables 95