Note 8: Income Taxes

12 Months Ended

Dec. 31, 2014

Notes

Note 8: Income Taxes

8)   Income Taxes

The Company’s income tax liability (benefit) at December 31 is summarized as follows:

	December 31	December 31
	2014	2013
Current	$   (333,350)	$ (1,578,071)
Deferred	20,755,117	17,529,919
Total	$ 20,421,767	$ 15,951,848

Significant components of the Company’s deferred tax (assets) and liabilities at December 31 are approximately as follows:

	December 31
	2014	2013
Assets
Future policy benefits	$ (6,856,001)	$ (5,381,385)
Loan loss reserve	(670,078)	(2,147,547)
Unearned premium	(1,687,059)	(1,759,087)
Available for sale securities	(125,797)	(566,316)
Net operating loss	(1,738,137)	(873,412)
Deferred compensation	(1,279,860)	(1,057,551)
Deposit obligations	(1,018,313)	(1,043,964)
Other	(1,398,152)	(1,287,773)
Less: Valuation allowance	5,276,431	5,593,063
Total deferred tax assets	(9,496,966)	(8,523,972)
Liabilities
Deferred policy acquisition costs	12,271,954	10,914,618
Basis difference in property and equipment	7,049,551	6,242,266
Value of business acquired	2,906,193	2,951,487
Deferred gains	5,472,003	3,545,692
Trusts	1,599,657	1,599,657
Tax on unrealized appreciation	952,725	800,171
Total deferred tax liabilities	30,252,083	26,053,891
Net deferred tax liability	$ 20,755,117	$ 17,529,919

The valuation allowance relates to differences between recorded deferred tax assets and liabilities and ultimate anticipated realization.

The valuation allowance decreased $316,632 during 2014 and $735,868 during 2013.

The Company paid $408,939, $4,009,598 and $1,900,000 in income taxes for 2014, 2013 and 2012, respectively.

The Company’s income tax expense (benefit) is summarized as follows for the years ended December 31:

	2014	2013	2012
Current	$    1,653,663	$    1,821,539	$    2,707,962
Deferred	3,072,642	416,267	1,930,813
Total	$    4,726,305	$    2,237,806	$    4,638,775

The reconciliation of income tax expense at the U.S. federal statutory rates is as follows:

	2014	2013	2012
Computed expense at statutory rate	$    4,243,524	$    3,340,067	$    7,472,953
Tax audit settlements	-	20,371	-
Other, net	482,781	(1,122,632)	(2,834,178)
Tax expense (benefit)	$    4,726,305	$    2,237,806	$    4,638,775

At December 31, 2014, the Company had no significant unrecognized tax benefits. As of December 31, 2014, the Company does not expect any material changes to the estimated amount of unrecognized tax benefits in the next twelve months. Federal and state income tax returns for 2011 through 2014 are subject to examination by taxing authorities. An examination of the Company’s 2012 federal income tax return is in process.