Note 7 - Income Taxes

9 Months Ended

Sep. 30, 2024

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, 2024 was 21.7% compared to 20.6% for the same period in 2023. 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, 2024 and 2023 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,
	2024			2023
Provision for income taxes at the statutory federal tax rates	$	549,949		$	(203,241	)
Increase (reduction) in taxes resulting from:
Tax-exempt interest income		(7,882	)		(8,450	)
Dividends received deduction		(10,391	)		(18,802	)
Proration of tax-exempt interest and dividends received deduction		4,338			6,604
Nondeductible expenses		23,240			22,512
Officer life insurance, net		2,459			2,527
Other		4,900			—
Total	$	566,613		$	(198,850	)

	For the Nine-Months Ended
	September 30,
	2024			2023
Provision for income taxes at the statutory federal tax rates	$	954,385		$	369,439
Increase (reduction) in taxes resulting from:
Tax-exempt interest income		(23,717	)		(27,316	)
Dividends received deduction		(29,645	)		(59,537	)
Proration of tax-exempt interest and dividends received deduction		12,671			21,074
Nondeductible expenses		73,585			57,555
Officer life insurance, net		(2,109	)		1,949
Total	$	985,170		$	363,164

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, 2024 and December 31, 2023, the Company does not have any capital or operating loss carryforwards. Periods still subject to IRS audit include 2021 through current year. There are currently no open tax exams. As of September 30, 2024 a significant portion of the Company's net deferred tax asset relates to unrealized losses on fixed income securities.