Taxes On Income (Tables)

12 Months Ended

Dec. 31, 2018

Taxes On Income

Provision for taxes

The provision for taxes on income consists of the following:

	Year ended December 31
	2018			2017
Federal benefit:
Current	$	—		$	—
Deferred		(727,333	)		(1,327,602	)
Total tax benefit	$	(727,333	)	$	(1,327,602	)
State expense (benefit):
Current	$	8,800		$	8,800
Deferred		(38,700	)		163,565
Total tax expense (benefit)	$	(29,900	)	$	172,365
Total expense (benefit):
Current	$	8,800		$	8,800
Deferred		(766,033	)		(1,164,037	)
Total tax benefit	$	(757,233	)	$	(1,155,237	)

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 21% and 34% on income for 2018 and 2017, respectively, as shown in the following table:

	Year ended December 31
	2018			2017
Computed income tax benefit at 21% and 34% for 2018 and 2017, respectively	$	(824,626	)	$	(3,359,275	)
Tax effect of:
Impact of change in tax law		—			2,137,385
State tax expense (benefit), net of federal tax benefit		(615,802	)		1,061
Change in valuation allowance – state net operating losses		592,181			(4,679	)
Expired state net operating losses		—			117,379
Deferred tax true up		63,481			—
Other, including nondeductible expenses		27,533			(47,108	)
Income tax benefit	$	(757,233	)	$	(1,155,237	)

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
	2018		2017
Deferred tax assets:
Discount on loss reserves	$	324,346	$	264,510
Unearned premium		671,792		794,461
Unearned commission income		388,099		360,443
Unearned policy fee income		166,565		212,419
Net operating loss carryforwards		3,515,221		2,746,927
State net operating loss carryforwards		1,850,934		1,258,753
Unrealized losses on investments		292,415		63,770
Bad debt reserve		340,688		334,705
Other		195,048		255,414
Total gross deferred tax assets		7,745,108		6,291,402
Less valuation allowance		1,850,934		1,258,753
Total deferred tax assets	$	5,894,174	$	5,032,649
Deferred tax liabilities:
Policy acquisition costs	$	867,652	$	1,036,477
State tax on undistributed insurance company earnings		392,802		372,146
Federal tax liability on state deferred tax assets		81,723		96,368
Depreciation and amortization		176,513		146,852
Total deferred tax liabilities	$	1,518,690	$	1,651,843
Net deferred tax assets	$	4,375,484	$	3,380,806