Note 6 – Income Taxes

UTG and UG file separate federal income tax returns.

Income tax expense (benefit) consists of the following components:

	2014		2013

Current tax	$	3,233,286	$	87,815
Deferred tax		(2,150,359)		693,109
	$	1,082,927	$	780,924

The expense for income differed from the amounts computed by applying the applicable United States statutory rate of 35% before income taxes as a result of the following differences:

	2014		2013

Tax computed at statutory rate	$	3,894,334	$	1,627,828
Changes in taxes due to:
Non-controlling interest		(1,073,704)		(216,189)
Current period loss for which no tax benefit was recognized		17,401		0
Small company deduction		(134,653)		(437,070)
Dividend received deduction		(1,414,353)		(92,477)
Other		(206,098)		(101,168)
Income tax expense	$	1,082,927	$	780,924

The following table summarizes the major components that comprise the deferred tax liability as reflected in the balance sheets:

	2014		2013

Investments	$	2,728,928	$	2,202,177
Cost of insurance acquired		3,166,794		3,722,744
Deferred policy acquisition costs		0		129,425
Management/consulting fees		(57,454)		(63,665)
Future policy benefits		1,778,105		2,038,699
Deferred gain on sale of subsidiary		2,312,483		2,312,483
Other assets (liabilitie)		(127,461)		66,732
Federal tax DAC		(387,601)		(774,954)
Deferred tax liability	$	9,413,794	$	9,633,641

At December 31, 2014 and 2013, respectively, the Company had gross deferred tax assets of $2,405,249 and $2,562,650, respectively, and gross deferred tax liabilities of $11,819,043 and $12,196,291, respectively, resulting from temporary differences primarily related to the life insurance subsidiary. A valuation allowance is to be provided 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 the Company's deferred tax assets since, in Management's judgment, the Company will more likely than not have sufficient taxable income in future periods to fully realize its existing deferred tax assets.

The Company's Federal income tax returns are periodically audited by the Internal Revenue Service ("IRS"). In February 2011, the IRS audited UTG's 2009 federal income tax return. The examination was closed with no adjustments to the return. There are currently no examinations in process, nor is Management aware of any pending examination by the IRS. The statutes of limitation for the assessments of additional tax are closed for all tax years prior to 2011. Management believes that adequate provision has been made in the consolidated financial statements for any potential assessments that may result from future tax examinations and other tax-related matters for all open tax years.

The Company classifies interest and penalties on underpayment of income taxes as income tax expense. No interest or penalties were included in the reported income taxes for the years presented. The Company is not aware of any potential or proposed changes to any of its tax filings.