10. Income Taxes (Tables)

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Schedule of Income Tax Rate From Continuing Operations

A reconciliation of the Federal statutory rate to our effective rate from continuing operations is as follows:

	For the Three Months Ended										For the Nine Months Ended
	September 30,										September 30,
	2012					2011					2012					2011
Computed expected tax expense	$	447,491		34.0	%	$	51,003		34.0	%	$	1,136,779		34.0	%	$	501,775		34.0	%
State taxes, net of Federal benefit		9,754		0.7			(10,225	)	(6.8	)		55,553		1.7			(24,976	)	(1.7	)
Permanent differences
Dividends received deduction		(10,386	)	(0.8	)		(18,782	)	(12.5	)		(46,963	)	(1.4	)		(25,911	)	(1.8	)
Non-taxable investment income		(15,781	)	(1.2	)		(16,449	)	(11.0	)		(49,590	)	(1.5	)		(62,992	)	(4.3	)
Stock-based compensation
expense		3,065		0.2			7,284		4.9			13,302		0.4			29,094		2.0
Other permanent differences		6,287		0.5			(42,889	)	(28.6	)		18,568		0.6			(28,344	)	(1.9	)
Prior year tax matters		(32,456	)	(2.5	)		(72,960	)	(48.6	)		(32,456	)	(1.0	)		(50,886	)	(3.5	)
Other		(5,812	)	(0.4	)		33,458		22.3			8,554		0.3			17,926		1.2
Total tax	$	402,162		30.6	%	$	(69,560	)	(46.4	)  %	$	1,103,747		33.0	%	$	355,686		24.1	%

Schedule of Deferrred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	September 30,			December 31,
	2012			2011
	(unaudited)
Deferred tax asset:
Net operating loss carryovers (1)	$	264,648		$	276,312
Claims reserve discount		275,543			220,354
Unearned premium		735,723			647,596
Deferred ceding commission revenue		1,585,172			1,354,016
Other		13,721			4,583
Total deferred tax assets		2,874,807			2,502,861
Deferred tax liability:
Investment in KICO (2)		1,169,000			1,169,000
Deferred acquisition costs		1,835,200			1,542,163
Intangibles		1,123,321			1,244,628
Depreciation and amortization		136,117			133,411
Reinsurance recoverable		20,400			20,400
Net unrealized appreciation of securities - available for sale		601,891			172,155
Investment income		-			10,543
Total deferred tax liabilities		4,885,929			4,292,300
Net deferred income tax liability	$	(2,011,122	)	$	(1,789,439	)

Losses subject to Annual Limitation

The losses subject to the Annual Limitation will be available for future years, expiring through December 31, 2019.

	September 30,		December 31,
Type of NOL	2012		2011		Expiration
State only (A)	$	364,633	$	284,749	December 31, 2027
Valuation allowance		130,585		42,437
State only, net of valuation allowance		234,048		242,312
Amount subject to Annual Limitation, Federal only (B)		30,600		34,000	December 31, 2019
Total deferred tax asset from net operating loss carryovers	$	264,648	$	276,312