15. Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Taxes Tables

Schedule of provision for income taxes from continuing operations

The provision for income taxes is comprised of the following:

Years ended December 31,	2013			2012
Current federal income tax expense	$	1,473,370		$	641,857
Current state income tax expense		14,952			(225	)
Deferred federal and state income tax expense		(724,053	)		(338,723	)
Provision for income taxes	$	764,269		$	302,909

Schedule of a reconciliation of the federal statutory rate

A reconciliation of the federal statutory rate to our effective tax rate is as follows:

Years ended December 31,	2013					2012
Computed expected tax expense	$	944,040		34.0	%	$	363,669		34.0
State taxes, net of Federal benefit		(48,411	)	(1.8	)		(44,687	)	(4.2	)
State valuation allowance		85,821		3.1			104,325		9.8
Permanent differences
Dividends received deduction		(91,163	)	(3.3	)		(64,274	)	(6.0	)
Non-taxable investment income		(43,905	)	(1.5	)		(68,667	)	(6.4	)
Stock-based compensation expense		-		-			16,414		1.5
Other permanent differences		25,709		0.9			25,956		2.4
Prior year tax matters		(52,145	)	(1.9	)		(46,906	)	(4.4	)
Other		(55,677	)	(2.0	)		17,079		1.6
Total tax	$	764,269		27.5	%	$	302,909		28.3

Schedule of Deferrred Tax Assets and Liabilities

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

	December 31,			December 31,
	2013			2012
Deferred tax asset:
Net operating loss carryovers (1)	$	246,476		$	264,648
Claims reserve discount		445,384			313,544
Unearned premium		1,000,372			811,413
Deferred ceding commission revenue		2,374,616			1,658,190
Other		17,087			10,921
Total deferred tax assets		4,083,935			3,058,716
Deferred tax liability:
Investment in KICO (2)		1,169,000			1,169,000
Deferred acquisition costs		2,332,489			1,893,759
Intangibles		921,143			1,082,886
Depreciation and amortization		197,223			152,576
Reinsurance recoverable		-			20,400
Net unrealized appreciation of securities - available for sale		157,167			527,376
Investment income		-			-
Total deferred tax liabilities		4,777,022			4,845,997
Net deferred income tax liability	$	(693,087	)	$	(1,787,281	)

Schedule of net operating loss carryovers

	December 31,			December 31,
Type of NOL	2013			2012			Expiration
State only (A)	$	459,989		$	380,810		December 31, 2032
Valuation allowance		(240,713	)		(146,762	)
State only, net of valuation allowance		219,276			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	$	246,476		$	264,648

Schedule of changes in net deferred income tax liability to the deferred income tax provision

The table below reconciles the changes in net deferred income tax liability to the deferred income tax provision for the year ended December 31, 2013:

Change in net deferred income tax liabilities	$	(1,094,194	)
Deferred tax expense allocated to other comprehensive income		(370,141	)
Deferred income tax provision	$	(724,053	)