Note 8: Income Taxes

12 Months Ended

Dec. 31, 2015

Notes

Note 8: Income Taxes

8)   Income Taxes

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

	December 31
	2015	2014
Current	$   (215,366)	$   (333,350)
Deferred	25,267,425	20,755,117
Total	$ 25,052,059	$ 20,421,767

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

	December 31
	2015	2014
Assets
Future policy benefits	$ (8,023,302)	$ (6,856,001)
Loan loss reserve	(1,163,700)	(670,078)
Unearned premium	(1,610,684)	(1,687,059)
Available for sale securities	(150,984)	(125,797)
Net operating loss	(588,537)	(1,738,137)
Deferred compensation	(1,994,927)	(1,279,860)
Deposit obligations	(1,026,984)	(1,018,313)
Other	(2,242,029)	(1,398,152)
Less: Valuation allowance	5,276,431	5,276,431
Total deferred tax assets	(11,524,716)	(9,496,966)
Liabilities
Deferred policy acquisition costs	14,838,604	12,271,954
Basis difference in property and equipment	9,375,146	7,049,551
Value of business acquired	2,972,883	2,906,193
Deferred gains	6,902,888	5,472,003
Trusts	1,599,657	1,599,657
Tax on unrealized appreciation	1,102,963	952,725
Total deferred tax liabilities	36,792,141	30,252,083
Net deferred tax liability	$ 25,267,425	$ 20,755,117

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

The valuation allowance decreased $-0- and $316,632 during 2015 and 2014, respectively.

The Company paid $2,716,161, $408,939 and $4,009,598 in income taxes for 2015, 2014 and 2013, respectively.

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

	2015	2014	2013
Current
Federal	$    2,423,846	$    1,532,539	$    1,564,311
State	412,175	121,124	257,228
	2,836,021	1,653,663	1,821,539
Deferred
Federal	4,001,873	2,677,319	399,919
State	360,791	395,323	16,348
	4,362,664	3,072,642	416,269
Total	$    7,198,685	$    4,726,305	$    2,237,806

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

	2015	2014	2013
Computed expense at statutory rate	$    6,739,332	$    4,243,524	$    3,340,067
State tax expense, net of federal tax benefit	510,158	340,855	180,560
Tax audit settlements	-	-	20,371
Other, net	(50,805)	141,926	(1,303,192)
Tax expense (benefit)	$    7,198,685	$    4,726,305	$    2,237,806

At December 31, 2015, the Company had no significant unrecognized tax benefits. As of December 31, 2015, 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 2012 through 2015 are subject to examination by taxing authorities. An examination of the Company’s 2012 federal income tax return was concluded without adjustment.