Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes

Income Taxes

Note 8: Income Taxes

The components of the provision for income taxes are as follows as of December 31, 2024 and 2023:

	December 31, 2024		December 31, 2023
Current tax expense (benefit):
Federal	$	25,036	$	—
State		50		25
Total current		25,086		25
Deferred tax expense (benefit):
Federal	$	(544,446)	$	(278,735)
State		(216,726)		(118,847)
Total deferred		(761,172)		(397,582)
Total provision for income taxes	$	(736,086)	$	(397,557)

The primary differences between income taxes at the federal statutory rate and the provision for income taxes includes state taxes and tax‑exempt interest and non-interest income.

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company's assets and liabilities. The major components of the net deferred tax assets as of December 31, 2024 and 2023, are presented below:

	December 31, 2024		December 31, 2023
Deferred tax assets
Allowance for credit losses	$	298,840	$	280,368
Deferred compensation		41,606		51,601
Net operating loss		2,653,705		1,945,176
Unrealized loss on securities available for sale		1,042,635		1,043,484
Unrealized loss on securities held to maturity		1,431,712		1,723,317
Other		32,175		5,429
Total deferred tax assets		5,500,673		5,049,375
Deferred tax liabilities
Fixed assets	$	(61,017)	$	(84,630)
Mortgage servicing rights		(91,634)		(85,407)
Other		(21,458)		(21,492)
Total deferred tax liabilities		(174,109)		(191,529)
Net deferred tax asset	$	5,326,564	$	4,857,846

The Company has federal net operating loss carryforwards totaling approximately $9.9 million and $7.3 million for the tax years ending December 31, 2024 and December 31, 2023, respectively.  Due to tax law changes from the Tax Cuts and Jobs Act, the federal net operating loss carryforwards do not expire.

The Company has Wisconsin net operating loss carryforwards totaling approximately $7.7 million and $5.7 million for the tax years ending December 31, 2024 and December 31, 2023, respectively. The Wisconsin net operating loss carryforwards begin to expire in 2042.

The Company has Minnesota net operating loss carryforwards totaling approximately $947,000 and $673,000 for the tax years ending December 31, 2024 and December 31, 2023, respectively. The Minnesota net operating loss carryforwards begin to expire in 2037.

The amount of the deferred tax asset is considered realizable based on projected future earnings and multiple tax planning strategies; however, it could be adjusted, and a valuation allowance recorded, if estimates of future taxable income during the carryforward period are reduced or if objective negative evidence in the form of cumulative losses is present and additional weight cannot be given to subjective evidence such as our projections for growth. Our projections for growth are based on growth within our deposit and loan portfolios, maintaining an adequate net interest margin, and an increase in noninterest income.

With few exceptions, the Company is no longer subject to federal or state examinations by taxing authorities for years before 2020.