Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Note 8—Income Taxes

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

	Year Ended December 31,
	2020		2019		2018
Income tax expense (benefit) from continuing operations:
Current income tax expense (benefit)	$	129,647	$	134,948	$	134,626
Deferred income tax expense (benefit)	35,264		35,449		27,535
	164,911		170,397		162,161
Shareholders’ equity:
Other comprehensive income (loss)	314,845		405,472		(293,678)
	$	479,756	$	575,869	$	(131,517)

In each of the years 2018 through 2020, 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.

The effective income tax rate differed from the expected U.S. federal statutory rate of 21% as shown below:

	Year Ended December 31,
	2020		%	2019		%	2018		%
Expected federal income tax expense (benefit)	$	188,304	21.0	$	195,569	21.0	$	181,371	21.0
Increase (reduction) in income taxes resulting from:
Tax reform adjustment	—		—	—		—	(798)		(0.1)
Low income housing investments	(11,913)		(1.3)	(11,605)		(1.2)	(12,240)		(1.4)
Share-based awards	(5,013)		(0.6)	(11,780)		(1.3)	(6,450)		(0.7)
Tax-exempt investment income	(5,830)		(0.6)	(3,192)		(0.3)	(1,230)		(0.1)
Other	(637)		(0.1)	1,405		0.1	1,508		0.1
Income tax expense (benefit)	$	164,911	18.4	$	170,397	18.3	$	162,161	18.8

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,
	2020		2019
Deferred tax assets:
Fixed maturity investments	$	4,279	$	6,161
Carryover of tax losses	5,534		7,827
Total gross deferred tax assets	9,813		13,988
Deferred tax liabilities:
Unrealized gains	808,071		493,174
Employee and agent compensation	88,012		81,174
Deferred acquisition costs	688,034		658,457
Future policy benefits, unearned and advance premiums, and policy claims	257,640		242,124
Other liabilities	7,209		26,271
Total gross deferred tax liabilities	1,848,966		1,501,200
Net deferred tax liability	$	1,839,153	$	1,487,212

Income Tax Return: Globe Life Inc. and its subsidiaries file a life-nonlife consolidated federal income tax return for the years ended December 31, 2020 and 2019. 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 2017 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 $26.4 million net operating loss (NOL) carryforward at December 31, 2020, of which $22.4 million was created prior to 2018 and will begin to expire in 2036 if not otherwise used to offset future taxable income. The remaining NOL carryforward of $4.0 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 2018 through 2020, 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 $0 thousand, $55 thousand, and $0 thousand, net of federal income tax expense, in its Consolidated Statements of Operations for 2020, 2019, and 2018, respectively. The Company had no accrued interest or penalties at December 31, 2020 or 2019.