Income Taxes

12 Months Ended

Dec. 31, 2019

Note 8—Income Taxes

The following table discloses significant components of income taxes for each year presented:


	Year Ended December 31,
	2019		2018		2017
Income tax expense (benefit) from continuing operations:
Current income tax expense (benefit)	$	134,948	$	134,626	$	138,262
Deferred income tax expense (benefit)	35,449		27,535		(765,877)
	170,397		162,161		(627,615)
Shareholders’ equity:
Other comprehensive income (loss)	405,472		(293,678)		318,475
	$	575,869	$	(131,517)	$	(309,140)

In each of the years 2017 through 2019, deferred income tax expense (benefit) was incurred because of certain differences between net income before income tax expense (benefit) as reported on the Consolidated Statements of Operations and taxable income as reported on Globe Life's income tax returns. As explained in Note 1—Significant Accounting Policies, these differences caused the consolidated financial statement book values of some assets and liabilities to be different from their respective tax bases.

Due to the passage of tax legislation in 2017, the Company recorded an $877 million deferred income tax benefit as a result of remeasuring its deferred assets and liabilities using the lower corporate tax rate as of the date of enactment. In the fourth quarter of 2018, the Company completed its analysis of the tax legislation, as required by ASC 740 Income Taxes, and recorded an additional $798 thousand adjustment related to the remeasurement of the deferred tax assets and liabilities based on the 21% rate.

The effective income tax rate differed from the expected U.S. federal statutory rate of 21% for 2019 and 2018 and 35% for 2017 as shown below:


	Year Ended December 31,
	2019		%	2018		%	2017		%
Expected federal income tax expense (benefit)	$	195,569	21.0	$	181,371	21.0	$	290,727	35.0

Increase (reduction) in income taxes resulting from:
Tax reform adjustment	—		—	(798)		(0.1)	(877,400)		(105.6)
Low income housing investments	(11,605)		(1.2)	(12,240)		(1.4)	(18,515)		(2.2)
Share-based awards	(11,780)		(1.3)	(6,450)		(0.7)	(19,549)		(2.4)
Other	(1,787)		(0.2)	278		—	(2,878)		(0.4)
Income tax expense (benefit)	$	170,397	18.3	$	162,161	18.8	$	(627,615)	(75.6)

The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:


	December 31,
	2019		2018
Deferred tax assets:
Fixed maturity investments	$	6,161	$	6,131
Carryover of tax losses	7,827		7,406
Total gross deferred tax assets	13,988		13,537
Deferred tax liabilities:
Unrealized gains	493,174		87,871
Employee and agent compensation	81,174		70,551
Deferred acquisition costs	658,457		633,687
Future policy benefits, unearned and advance premiums, and policy claims	242,124		242,285
Other liabilities	26,271		25,603
Total gross deferred tax liabilities	1,501,200		1,059,997
Net deferred tax liability	$	1,487,212	$	1,046,460

Income Tax Return: Globe Life Inc. and its subsidiaries file a life-nonlife consolidated federal income tax return for the years ended December 31, 2019 and 2018. Prior to 2018, Family Heritage Life Insurance Company of America (Family Heritage Life) filed its federal income tax return on a separate company basis. The statutes of limitations for the Internal Revenue Service's examination and assessment of additional tax are closed for all tax years prior to 2016 with respect to Globe Life's consolidated as well as Family Heritage Life's federal income tax returns. Management concludes that adequate provision has been made in the consolidated financial statements for any potential assessments that may result from current or future tax examinations and other tax-related matters for all open years.

Valuations: Globe Life has a $37.3 million net operating loss (NOL) carryforward at December 31, 2019, of which $34.1 million was created prior to 2018 and will begin to expire in 2033 if not otherwise used to offset future taxable income. The remaining NOL carryforward of $3.2 million may be carried forward indefinitely. A valuation allowance is to be recorded when it is more likely than not that deferred tax assets will not be realized by the Company. No valuation allowance has been recorded relating to Globe Life's deferred tax assets as management has determined that Globe Life will more likely than not have sufficient taxable income in future periods to fully realize its existing deferred tax assets.

Globe Life's tax liability is adjusted to include a provision for uncertain tax positions taken or expected to be taken in a tax return. However, during the years 2017 through 2019, Globe Life did not have any uncertain tax positions which resulted in unrecognized tax benefits.

Tax penalties and interest: Globe Life's continuing practice is to recognize penalties and interest related to income tax matters in income tax expense. The Company recognized interest income of $55 thousand, $0, and $5 thousand, net of federal income tax expense, in its Consolidated Statements of Operations for 2019, 2018, and 2017, respectively. The Company had no accrued interest or penalties at December 31, 2019 or 2018.