Taxes On Income (Tables)

12 Months Ended

Dec. 31, 2017

Taxes On Income Tables

Provision for taxes

The provision for taxes on income consists of the following:

	Year ended December 31
	2017			2016
Federal expense (benefit):
Current	$	—		$	(857,279	)
Deferred		(1,327,602	)		148,808
Total tax expense (benefit)	$	(1,327,602	)	$	(708,471	)
State expense (benefit):
Current	$	8,800		$	8,774
Deferred		163,565			(10,264	)
Total tax expense (benefit)	$	172,365		$	(1,490	)
Total expense (benefit):
Current	$	8,800		$	(848,505	)
Deferred		(1,164,037	)		138,544
Total tax expense (benefit)	$	(1,155,237	)	$	(709,961	)

Reconcilation of income tax provision and expected income tax

The income tax provision reflected in the Consolidated Statements of Operations is different than the expected federal income tax rate of 34% on income as shown in the following table:

	Year ended December 31
	2017			2016
Computed income tax benefit at 34%	$	(3,359,275	)	$	(718,841	)
Tax effect of:
Impact of change in tax law		2,137,385			—
State tax expense (benefit), net of federal tax benefit		1,061			(990	)
Expired state net operating losses		117,379			—
Other		(51,787	)		9,870
Income tax benefit	$	(1,155,237	)	$	(709,961	)

Components of net deferred tax assets

Significant components of the Company’s net deferred tax assets and liabilities are as follows:

	Year ended December 31
	2017		2016
Deferred tax assets:
Discount on loss reserves	$	264,510	$	546,195
Unearned premium		794,461		1,340,027
Unearned commission income		360,443		469,730
Unearned policy fee income		212,419		347,792
Net operating loss carryforwards		2,746,927		—
State net operating loss carryforwards		1,258,753		1,463,188
Unrealized losses on investments		63,770		—
Bad debt reserve		334,705		507,448
Other		255,414		301,416
Total gross deferred tax assets		6,291,402		4,975,796
Less valuation allowance		1,258,753		1,264,627
Total deferred tax assets	$	5,032,649	$	3,711,169
Deferred tax liabilities:
Policy acquisition costs	$	1,036,477	$	1,859,491
Unrealized gains on investments		—		4,108
State tax on undistributed insurance company earnings		372,146		337,622
Federal tax liability on state deferred tax assets		96,368		167,585
Depreciation and amortization		146,852		165,017
Total deferred tax liabilities	$	1,651,843	$	2,533,823
Net deferred tax assets	$	3,380,806	$	1,177,346