7. INCOME TAXES

The Company’s effective tax rate for the three and six-month periods ended June 30, 2020, were 20.1% and 22.2%, respectively compared to 14.8% and 15.7% for the same periods in 2019, respectively. Effective rates are dependent upon components of pretax earnings and the related tax effects.

Income tax expense for the three and six month periods ended June 30, 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
	June 30,
	2020		2019
Provision for income taxes at the statutory federal tax rates	$	205,528	$	108,999
Increase (reduction) in taxes resulting from:
Dividends received deduction		(7,161)		(9,764)
Tax-exempt interest income		(15,784)		(20,650)
Proration of tax-exempt interest and dividends received deduction		5,600		7,604
Nondeductible expenses		8,725		8,959
Officer life insurance, net		(170)		(18,195)
Total	$	196,738	$	76,953



	For the Six-Months Ended
	June 30,
	2020		2019
Provision for income taxes at the statutory federal tax rates	$	(321,768)	$	182,025
Increase (reduction) in taxes resulting from:
Dividends received deduction		(13,696)		(19,527)
Tax-exempt interest income		(31,264)		(43,816)
Proration of tax-exempt interest and dividends received deduction		10,968		15,836
Nondeductible expenses		14,228		16,046
Officer life insurance, net		633		(14,618)
Total	$	(340,899)	$	135,946

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 June 30, 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.