Taxes On Income (Tables)

12 Months Ended

Dec. 31, 2019

Taxes On Income

Provision for taxes

The provision for taxes on income consists of the following:

	Year ended December 31
	2019			2018
Federal expense (benefit):
Current	$	13,809		$	—
Deferred		(51,809	)		(727,333	)
Total tax benefit	$	(38,000	)	$	(727,333	)
State expense (benefit):
Current	$	8,800		$	8,800
Deferred		(104,987	)		(38,700	)
Total tax benefit	$	(96,187	)	$	(29,900	)
Total expense (benefit):
Current	$	22,609		$	8,800
Deferred		(156,796	)		(766,033	)
Total tax benefit	$	(134,187	)	$	(757,233	)

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% on income as shown in the following table:

	Year ended December 31
	2019			2018
Computed income tax benefit at 21%	$	(682,477	)	$	(824,626	)
Tax effect of:
State tax expense benefit, net of federal tax benefit		(139,765	)		(615,802	)
Change in valuation allowance – state net operating losses		63,777			592,181
Change in valuation allowance – federal		600,000			—
Deferred tax true up		289			63,481
Other, including nondeductible expenses		23,989			27,533
Income tax benefit	$	(134,187	)	$	(757,233	)

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
	2019		2018
Deferred tax assets:
Discount on loss reserves	$	329,065	$	324,346
Unearned premium		747,217		671,792
Unearned commission income		432,969		388,099
Unearned policy fee income		145,533		166,565
Net operating loss carryforwards		4,145,783		3,515,221
State net operating loss carryforwards		1,931,665		1,850,934
Unrealized losses on investments		—		292,415
Bad debt reserve		336,075		340,688
Other		205,292		195,048
Total gross deferred tax assets		8,273,599		7,745,108
Less valuation allowance		2,531,665		1,850,934
Total deferred tax assets	$	5,741,934	$	5,894,174
Deferred tax liabilities:
Policy acquisition costs	$	892,349	$	867,652
State tax on undistributed insurance company earnings		343,735		392,802
Federal tax liability on state deferred tax assets		90,461		81,723
Depreciation and amortization		175,524		176,513
Unrealized gains on investments		314,433		—
Total deferred tax liabilities	$	1,816,502	$	1,518,690
Net deferred tax assets	$	3,925,432	$	4,375,484