Note 7 - Income Taxes

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

7. INCOME TAXES

The Company’s effective tax rate for the three month periods ended March 31, 2023 was 20.4% compared to 23.7% for the same period in 2022. Effective rates are dependent upon components of pretax earnings and losses and the related tax effects.

Income tax expense for the three month periods ended March 31, 2023 and 2022 differed from the amounts computed by applying the U.S. federal tax rate of 21% to pretax income from continuing operations as demonstrated in the following table:

	For the Three-Months Ended
	March 31,
	2023			2022
Provision for income taxes at the statutory federal tax rates	$	416,654		$	(44,088	)
Increase (reduction) in taxes resulting from:
Dividends received deduction		(20,460	)		(11,281	)
Tax-exempt interest income		(10,072	)		(13,351	)
Proration of tax-exempt interest and dividends received deduction		7,417			5,970
Nondeductible expenses		15,091			17,292
Officer life insurance, net		(3,110	)		(4,347	)
Total	$	405,520		$	(49,805	)

Management believes it is more likely than not that all deferred tax assets will be recovered as the result of future operations, which will generate sufficient taxable income to realize the deferred tax asset.

As of March 31, 2023 and December 31, 2022, the Company does not have any capital or operating loss carryforwards. Periods still subject to IRS audit include 2019 through current year. Unrealized losses on fixed income securities and equity securities the investment portfolio during 2022 have kept the Company in net deferred tax asset position as of  March 31, 2023. There are currently no open tax exams.