Note 7 - Income Taxes

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

7. INCOME TAXES

The Company’s effective tax rate for the nine month periods ended September 30, 2023 was 20.6% compared to 21.1% 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 nine month periods ended September 30, 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
	September 30,
	2023			2022
Provision for income taxes at the statutory federal tax rates	$	(203,241	)	$	170,279
Increase (reduction) in taxes resulting from:
Dividends received deduction		(18,802	)		(10,010	)
Tax-exempt interest income		(8,450	)		(12,011	)
Proration of tax-exempt interest and dividends received deduction		6,604			(2,217	)
Nondeductible expenses		22,512			32,766
Officer life insurance, net		1,949			2,307
Prior year true-up and other		578			—
Total	$	(198,850	)	$	181,114

	For the Nine-Months Ended
	September 30,
	2023			2022
Provision for income taxes at the statutory federal tax rates	$	369,439		$	(974,378	)
Increase (reduction) in taxes resulting from:
Dividends received deduction		(59,537	)		(32,408	)
Tax-exempt interest income		(27,316	)		(38,323	)
Proration of tax-exempt interest and dividends received deduction		21,074			9,581
Nondeductible expenses		57,555			60,177
Officer life insurance, net		1,949			(5,375	)
Prior year true-up and other		—			—
Total	$	363,164		$	(980,726	)

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 September 30, 2023 and December 31, 2022, the Company does not have any capital or operating loss carryforwards. Periods still subject to IRS audit include 2020 through current year. There are currently no open tax exams. As of September 30, 2023 a significant portion of the Company's net deferred tax asset relates to unrealized losses on fixed income securities and equity securities.