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INCOME TAXES
 12 Months Ended
Dec. 31, 2019
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company recognizes tax-related interest and penalties as a component of tax expense.  The Company files income tax returns in the U.S. federal jurisdiction and various states.  The Company is not subject to examinations by authorities related to its U.S. federal or state income tax filings for years prior to 2014. Tax returns have been filed through the year 2018.
 
Net deferred tax liabilities are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of the enacted tax laws. Management believes that, based on its historical pattern of taxable income, the Company will produce sufficient income in the future to realize its deferred tax assets. The Company recognized a net deferred tax liability position of $96,000 at December 31, 2019 and a net deferred tax asset position of $716,000 at December 31, 2018.

At December 31, 2018, the Company recognized an AMT credit in income tax recoverable of $1,622,000. Of this amount, $1,074,000 was recovered with the 2018 return and Management anticipates the remaining $548,000 will be recovered by 2020 pursuant to allowable amounts under the Tax Cuts and Jobs Act enacted in 2017.

The tax effect of significant differences representing deferred tax assets and liabilities are as follows:
($ in thousands)
 
As of December 31,
2019
 
As of December 31,
2018
General expenses
 
$
1,269

 
$
1,067

Unearned premiums
 
1,288

 
1,265

Claims liabilities
 
645

 
552

Impairment on real estate owned
 
119

 
119

Unrealized losses on securities available-for-sale
 
—

 
368

Unrealized loss on interest rate swaps
 
14

 
49

Deferred tax assets
 
3,335

 
3,420

 
 
 
 
 
Trading securities
 
(1
)
 
—

Depreciation
 
(93
)
 
(79
)
Deferred policy acquisition costs
 
(1,610
)
 
(1,645
)
Pre-1984 policyholder surplus account
 
(397
)
 
(463
)
Unrealized gains on securities available-for-sale
 
(667
)
 
—

Unrealized gains on equity securities
 
(663
)
 
(517
)
Deferred tax liabilities
 
(3,431
)
 
(2,704
)
Net deferred tax asset (liability)
 
$
(96
)
 
$
716


The appropriate income tax effects of changes in temporary differences are as follows:

($ in thousands)
 
Year ended
December 31,
 
 
2019
 
2018
Deferred policy acquisition costs
 
$
(35
)
 
$
(61
)
Other-than-temporary impairments
 
—

 
(3
)
Trading securities
 
1

 
—

Unearned premiums
 
(23
)
 
4

General expenses
 
(202
)
 
2

Depreciation
 
14

 
(9
)
Claims liabilities
 
(93
)
 
(68
)
AMT credit
 
—

 
1,575

Impact of repeal of special provision on pre-1984 policyholder surplus
 
(66
)
 
(66
)
Unrealized gains (losses) on equity securities
 
149

 
(43
)
Deferred income tax expense (benefit)
 
$
(255
)
 
$
1,331



Total income tax expense (benefit) varies from amounts computed by applying current federal income tax rates to income or loss before income taxes.  The reasons for these differences and the approximate tax effects are as follows:
 
 
Year ended
December 31,
 
 
2019
 
2018
Federal income tax rate applied to pre-tax income/loss
 
21.0
 %
 
21.0
 %
Dividends received deduction and tax-exempt interest
 
(0.3
)%
 
(2.4
)%
Company owned life insurance
 
(9.6
)%
 
7.4
 %
Other, net
 
0.1
 %
 
0.9
 %
Effective federal income tax rate
 
11.2
 %
 
26.9
 %