Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes [Abstract]

Income Taxes

Note 6 – Income Taxes

UTG and UG file separate federal income tax returns.

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

	2021			2020
Current tax	$	(32,134	)	$	2,476,599
Deferred tax		2,101,807			(2,136,105	)
Income tax expense	$	2,069,673		$	340,494

The expense for income taxes differed from the amounts computed by applying the applicable United States statutory rate of 21% as of December 31, 2021 and 2020, before income taxes as a result of the following differences:

	2021			2020
Tax computed at statutory rate	$	2,483,215		$	536,982
Changes in taxes due to:
Non-controlling interest		(19,340	)		(26,871	)
Dividend received deduction		(107,180	)		(155,597	)
Oil and gas royalties depletion		(60,969	)		(541	)
Other		(226,053	)		(13,479	)
Income tax expense	$	2,069,673		$	340,494

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

	2021			2020
Investments	$	12,159,338		$	10,918,449
Cost of insurance acquired		711,165			861,309
Management/consulting fees		(8,518	)		(8,832	)
Future policy benefits		(447,958	)		(511,297	)
Deferred gain on sale of subsidiary		1,387,490			1,387,490
Other assets (liabilities)		(57,783	)		364,797
Reserves adjustment		192,212			240,266
Federal tax DAC		(255,550	)		(256,468	)
Deferred tax liability	$	13,680,396		$	12,995,714

At December 31, 2021 and 2020, the Company had gross deferred tax assets of $1,292,790 and $1,413,608, respectively, and gross deferred tax liabilities of $14,973,186 and $14,409,322, 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”). There are currently no examinations in process, nor is Management aware of any pending examination by the IRS.  The Company follows the accounting guidance for uncertainty in income taxes using the provisions of Financial Accounting Standards Board (“FASB”) ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the position will be sustained upon examination by the tax authorities. Such tax positions initially and subsequently need to be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company has evaluated its tax positions, expiring statutes of limitations, changes in tax law and new authoritative rulings and believes that no disclosure relative to a provision of income taxes is necessary, at this time, to cover any uncertain tax positions. Tax years that remain subject to examination are the years ended December 31, 2018, 2019, 2020 and 2021.

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.