Income Taxes

12 Months Ended

Dec. 31, 2023

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:

	2023			2022
Current tax expense (benefit)	$	(517,108	)	$	7,054,454
Deferred tax		372,861			2,517,685
Income tax expense (benefit)	$	(144,247	)	$	9,572,139

The expense for income taxes differed from the amounts computed by applying the applicable United States statutory rate of 21% as of December 31, 2023 and 2022, before income taxes as a result of the following differences:

	2023			2022
Tax computed at statutory rate	$	404,427		$	9,226,662
Changes in taxes due to:
Non-controlling interest		(23,813	)		(22,332	)
Dividend received deduction		(109,642	)		(142,790	)
Oil and gas royalty's depletion		(106,797	)		(170,123	)
Other, including prior year true up		(308,422	)		680,722
Income tax expense (benefit)	$	(144,247	)	$	9,572,139

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

	2023			2022
Investments	$	11,862,470		$	10,794,061
Cost of insurance acquired		427,748			566,612
Management/consulting fees		(7,899	)		(8,206	)
Future policy benefits		(697,024	)		(718,338	)
Deferred gain on sale of subsidiary		1,387,490			1,387,490
Other liabilities		(284,350	)		(330,488	)
Reserves adjustment		96,105			144,158
Federal tax DAC		(236,950	)		(253,151	)
Loan loss reserve		(120,750	)		0
Deferred tax liability	$	12,426,840		$	11,582,138

At December 31, 2023 and 2022, the Company had gross deferred tax assets of $1,939,816 and $1,808,474, respectively, and gross deferred tax liabilities of $14,366,656 and $13,390,612, 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, 2020, 2021, 2022 and 2023.

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.