7. INCOME TAXES

The Company’s effective tax rate for the three month period ended March 31, 2020, was 21.4%, compared to 17.0% for the same period in 2019. Effective rates are dependent upon components of pretax earnings and the related tax effects.

Income tax expense for the three month periods ended March 31, 2020 and 2019, 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
	March 31,
	2020		2019
Provision for income taxes at the statutory federal tax rates	$	(527,296)	$	73,025
Increase (reduction) in taxes resulting from:
Dividends received deduction		(6,535)		(9,763)
Tax-exempt interest income		(15,480)		(23,166)
Proration of tax-exempt interest and dividends received deduction		5,368		8,232
Officer life insurance, net		803		3,578
Nondeductible expenses		5,503		7,087
Total	$	(537,637)	$	58,993

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, 2020 and December 31, 2019, the Company does not have any capital or operating loss carryforwards. Periods still subject to IRS audit include 2016 through current year. There are currently no open tax exams.