Note 8: Income Taxes

12 Months Ended

Dec. 31, 2016

Notes

Note 8: Income Taxes

8)         Income Taxes

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

	December 31
	2016	2015
Current	$ (1,511,762)	$   (215,366)
Deferred	29,416,056	25,267,425
Total	$ 27,904,294	$ 25,052,059

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

	December 31
	2016	2015
Assets
Future policy benefits	$ (10,243,465)	$ (8,023,302)
Loan loss reserve	(288,590)	(1,163,700)
Unearned premium	(1,519,722)	(1,610,684)
Available for sale securities	(51,266)	(150,984)
Net operating loss	(1,531,160)	(588,537)
Deferred compensation	(2,225,208)	(1,994,927)
Deposit obligations	(1,033,580)	(1,026,984)
Other	(1,805,260)	(2,242,029)
Less: Valuation allowance	4,262,549	5,276,431
Total deferred tax assets	(14,435,702)	(11,524,716)
Liabilities
Deferred policy acquisition costs	18,150,517	14,838,604
Basis difference in property and equipment	10,749,036	9,375,146
Value of business acquired	2,573,902	2,972,883
Deferred gains	9,290,123	6,902,888
Trusts	1,599,657	1,599,657
Tax on unrealized appreciation	1,488,523	1,102,963
Total deferred tax liabilities	43,851,758	36,792,141
Net deferred tax liability	$  29,416,056	$ 25,267,425

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

The valuation allowance decreased $1,013,882 and $-0- during the years ended December 31, 2016 and 2015, respectively.

The Company paid $2,667,918, $2,716,161 and $408,939 in income taxes for the years ended December 31, 2016, 2015 and 2014, respectively.

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

	2016	2015	2014
Current
Federal	$    1,138,196	$    2,423,846	$    1,532,539
State	245,764	412,175	121,124
	1,383,960	2,836,021	1,653,663
Deferred
Federal	4,573,337	4,478,974	2,827,580
State	503,562	430,953	417,420
	5,076,899	4,909,927	3,245,004
Total	$    6,460,859	$    7,745,948	$    4,898,663

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

	2016	2015	2014
Computed expense at statutory rate	$    7,051,723	$    7,216,433	$    4,393,785
State tax expense, net of federal tax benefit	494,555	556,464	355,439
Change in valuation allowance	(1,013,882)	-	(316,632)
Other, net	(71,537)	(26,949)	466,071
Tax expense	$    6,460,859	$    7,745,948	$    4,898,663

At December 31, 2016, the Company had no significant unrecognized tax benefits. As of December 31, 2016, 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 2013 through 2016 are subject to examination by taxing authorities.