9. Income Taxes (Tables)

3 Months Ended

Mar. 31, 2014

Notes to Financial Statements

Schedule of Deferrred Tax Assets and Liabilities

The net deferred income taxes on the balance sheet reflect temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and income tax purposes, tax effected at a various rates depending on whether the temporary differences are subject to federal taxes, state taxes, or both. Significant components of the Company’s deferred tax assets and liabilities are as follows:

	March 31,			December 31,
	2014			2013
Deferred tax asset:
Net operating loss carryovers (1)	$	241,684		$	246,476
Claims reserve discount		491,819			445,384
Unearned premium		1,071,725			1,000,372
Deferred ceding commission revenue		2,419,998			2,374,616
Other		-			17,087
Total deferred tax assets		4,225,226			4,083,935
Deferred tax liability:
Investment in KICO (2)		1,169,000			1,169,000
Deferred acquisition costs		2,445,721			2,332,489
Intangibles		880,707			921,143
Depreciation and amortization		181,858			197,223
Net unrealized appreciation of securities - available for sale		386,930			157,167
Other		29,291			-
Total deferred tax liabilities		5,093,507			4,777,022
Net deferred income tax liability	$	(868,281	)	$	(693,087	)

Losses subject to Annual Limitation

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

	March 31,			December 31,
Type of NOL	2014			2013			Expiration
State only (A)	$	470,734		$	459,989		December 31, 2034
Valuation allowance		(242,650	)		(240,713	)
State only, net of valuation allowance		228,084			219,276
Amount subject to Annual Limitation, federal only (B)		13,600			27,200		December 31, 2019
Total deferred tax asset from net operating loss carryovers	$	241,684		$	246,476