7. INCOME TAXES

The Company’s effective tax rate for the nine-month period ended September 30, 2019, was 14.6%, compared to 3.1% for the same period in 2018. Effective rates are dependent upon components of pretax earnings and the related tax effects.

Income tax expense for the three and nine-month periods ended September 30, 2019 and 2018, 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 tables:



	For the Three-Months Ended
	September 30,
	2019		2018
Provision for income taxes at the statutory federal tax rates	$	(5,684)	$	(60,088)
Increase (reduction) in taxes resulting from:
Dividends received deduction		(8,955)		(8,951)
Tax-exempt interest income		(16,433)		(32,002)
Proration of tax-exempt interest and dividends received deduction		5,939		10,192
Officer life insurance, net		3,579		3,579
Nondeductible expenses		8,404		12,439
Prior year true-ups and other		—		(2,738)
Total	$	(13,150)	$	(77,569)



	For the Nine-Months Ended
	September 30,
	2019		2018
Provision for income taxes at the statutory federal tax rates	$	176,341	$	56,056
Increase (reduction) in taxes resulting from:
Dividends received deduction		(28,482)		(26,852)
Tax-exempt interest income		(60,249)		(101,894)
Proration of tax-exempt interest and dividends received deduction		21,775		31,684
Officer life insurance, net		(11,039)		10,386
Nondeductible expenses		24,450		36,608
Prior year true-up and other		—		2,221
Total	$	122,796	$	8,209

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, 2019 and December 31, 2018, the Company does not have any capital or operating loss carryforwards. Periods still subject to IRS audit include 2015 through current year. There are currently no open tax exams.