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Income Taxes
12 Months Ended
Dec. 31, 2021
Income Taxes  
Note 15. Income Taxes

Note 15.  Income Taxes

 

The Company prepares its income tax return on a consolidated basis.  Income taxes are allocated to members of the consolidated group based on taxable income. 

 

The components of the Provision for income taxes for the years ended December 31 were as follows:

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Currently paid or payable

 

$3,059,462

 

 

$2,518,516

 

Deferred benefit

 

 

(76,374)

 

 

(270,427)

Total income tax expense

 

$2,983,088

 

 

$2,248,089

 

 

Total income tax expense differed from the amounts computed at the statutory federal income tax rate of 21% primarily due to the following for the years ended December 31:

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Computed expense at statutory rates

 

$3,385,499

 

 

$2,731,384

 

Tax exempt interest and BOLI

 

 

(228,773)

 

 

(309,102)

Disallowed interest

 

 

6,290

 

 

 

12,917

 

Partnership rehabilitation and tax credits

 

 

(468,054)

 

 

(433,970)

Low income housing investment amortization expense

 

 

286,808

 

 

 

265,982

 

Other

 

 

1,318

 

 

 

(19,122)

 

 

$2,983,088

 

 

$2,248,089

 

 

The deferred income tax benefit consisted of the following items for the years ended December 31:

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Depreciation

 

$66,603

 

 

$10,368

 

Mortgage servicing rights

 

 

(5,129)

 

 

(3,661)

Deferred compensation

 

 

2,246

 

 

 

3,722

 

Bad debts

 

 

(105,372)

 

 

(269,219)

Limited partnership amortization

 

 

57,387

 

 

 

(39,430)

Investment in CFS Partners

 

 

35,651

 

 

 

13,408

 

Deferred SBA PPP fees

 

 

(108,668)

 

 

0

 

Prepaid expenses

 

 

(5,384)

 

 

11,072

 

Other

 

 

(13,708)

 

 

3,313

 

Change in deferred tax benefit

 

$

(76,374

)

 

$

(270,427

)

Listed below are the significant components of the net deferred tax asset at December 31:

 

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Components of the deferred tax asset:

 

 

 

 

 

 

Bad debts

 

$1,619,154

 

 

$1,513,782

 

Deferred compensation

 

 

6,930

 

 

 

9,176

 

Contingent liability - MPF program

 

 

17,838

 

 

 

17,838

 

Finance lease

 

 

19,044

 

 

 

7,101

 

Deferred SBA PPP fees

 

 

108,668

 

 

 

0

 

Unrealized loss on debt securities AFS

 

 

310,208

 

 

 

0

 

Other

 

 

22,716

 

 

 

20,814

 

Total deferred tax asset

 

 

2,104,558

 

 

 

1,568,711

 

 

 

 

 

 

 

 

 

 

Components of the deferred tax liability:

 

 

 

 

 

 

 

 

Depreciation

 

 

461,168

 

 

 

394,564

 

Limited partnerships

 

 

94,952

 

 

 

37,565

 

Mortgage servicing rights

 

 

188,521

 

 

 

193,650

 

Unrealized gain on debt securities AFS

 

 

0

 

 

 

243,321

 

Investment in CFS Partners

 

 

120,113

 

 

 

84,462

 

Operating Lease

 

 

3,315

 

 

 

3,178

 

Prepaid expenses

 

 

74,426

 

 

 

79,810

 

Total deferred tax liability

 

 

942,495

 

 

 

1,036,550

 

Net deferred tax asset

 

$1,162,063

 

 

$532,161

 

 

U.S. GAAP provides for the recognition and measurement of deductible temporary differences (including general valuation allowances) to the extent that it is more likely than not that the deferred tax asset will be realized.

 

The net deferred tax asset is included in Other assets in the consolidated balance sheets.

 

ASC Topic 740, Income Taxes, defines the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company's financial statements. Topic 740 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the consolidated financial statements. The Company has adopted these provisions and there was no material effect on the consolidated financial statements.  The Company is currently open to audit under the statute of limitations by the IRS for the years ended December 31, 2018 through 2020.  The 2021 tax return has not yet been filed.