9. Income Taxes (Tables)

6 Months Ended

Jun. 30, 2013

Notes to Financial Statements

Schedule of Deferrred Tax Assets and Liabilities

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

	June 30,			December 31,
	2013			2012
	(unaudited)
Deferred tax asset:
Net operating loss carryovers (1)	$	266,800		$	264,648
Claims reserve discount		355,646			313,544
Unearned premium		940,362			811,413
Deferred ceding commission revenue		1,858,019			1,658,190
Other		-			10,921
Total deferred tax assets		3,420,827			3,058,716
Deferred tax liability:
Investment in KICO (2)		1,169,000			1,169,000
Deferred acquisition costs		2,110,126			1,893,759
Intangibles		1,002,014			1,082,886
Depreciation and amortization		153,947			152,576
Reinsurance recoverable		-			20,400
Net unrealized appreciation of securities - available for sale		250,426			527,376
Other		16,808			-
Total deferred tax liabilities		4,702,321			4,845,997
Net deferred income tax liability	$	(1,281,494	)	$	(1,787,281	)

Losses subject to Annual Limitation

The deferred tax assets from net operating loss carryovers are as follows:

	June 30,			December 31,
Type of NOL	2013			2012			Expiration
State only (A)	$	405,725		$	380,810		December 31, 2033
Valuation allowance		(166,125	)		(146,762	)
State only, net of valuation allowance		239,600			234,048
Amount subject to Annual Limitation, federal only (B)		27,200			30,600		December 31, 2019
Total deferred tax asset from net operating loss carryovers	$	266,800		$	264,648