Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Note 9. Income Taxes

The components of income tax expense for the years ended December 31, 2016, 2015, and 2014 are as follows:

	2016			2015			2014
Current:
Federal	$	37,591		$	(322,723	)	$	408,056
State		26,374			(60,104	)		187,266
Total current		63,965			(382,827	)		595,322
Deferred income (benefits) taxes:
Federal		(185,031	)		352,543			(253,848	)
State		38,002			275,205			(32,822	)
Total deferred (benefits) taxes		(147,029	)		627,748			(286,670	)
Income tax expense	$	(83,064	)	$	244,921		$	308,652

A reconciliation of income tax expense computed at the statutory rate of 34% to the actual income tax expense for the years ended December 31, 2016, 2015, and 2014 is as follows:

	2016			2015			2014
Income before income tax expense (benefit)	$	1,017,656		$	1,597,537		$	2,223,178
Taxes computed at Federal income tax rate	$	346,003		$	543,163		$	755,881
Increase (decrease) resulting from:
Tax-exempt income		(457,858	)		(441,890	)		(531,764	)
State income taxes, net of Federal income tax benefit		42,488			141,966			101,933
Other		(13,697	)		1,682			(17,398	)
Income tax expense	$	(83,064	)	$	244,921		$	308,652

The components of the net deferred income tax benefits as of December 31, 2016, 2015, and 2014 are as follows:

	2016		2015		2014
Deferred income tax benefits:
Accrued deferred compensation	$	145,654	$	153,256	$	142,308
Impairment loss on investment securities		-		-		1,305,584
Allowance for credit losses		94,628		362,732		364,697
Nonaccrual interest		445,173		445,173		445,173
Alternative minimum tax credits		966,855		929,264		615,186
Net operating loss carryforward credits		665,119		373,986		-
Accumulated depreciation		53,706		61,019		72,354
Other real estate owned		18,293		14,940		14,940
Reserve for unfunded commitments		9,780		4,641		78,890
Other temporary differences		22,540		2,116		2,116
Accumulated securities premium accretion		210,615		138,207		71,834
Net unrealized depreciation on investment securities available for sale		527,554		199,277		-
Total deferred income tax benefits		3,159,917		2,684,611		3,113,082
Deferred income tax liabilities:
Accumulated securities discount accretion		-		-		-
Net unrealized appreciation on investment securities available for sale		-		-		67,847
Total deferred income tax liabilities		-		-		67,847
Net deferred income tax benefits	$	3,159,917	$	2,684,611	$	3,045,235

Management has determined that no valuation allowance is required as it believes it is more likely than not that all of the deferred tax assets will be fully realizable in the future. At December 31, 2016, 2015, and 2014, management believes there are no uncertain tax positions under ASC Topic 740 Income Taxes (formerly FIN 48, Accounting for Uncertainty in Income Taxes).

The Company’s federal income tax returns for 2015, 2014, and 2013 are subject to examinations by the IRS generally for three years after they were filed. In addition, the Company’s state tax returns for the same years are subject to examination by state tax authorities for similar time periods. The 2016 income tax return will be filed in 2017.