9. Income Taxes (Tables)

6 Months Ended

Jun. 30, 2014

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,
	2014			2013
Deferred tax asset:
Net operating loss carryovers (1)	$	255,192		$	246,476
Claims reserve discount		484,601			445,384
Unearned premium		1,220,379			1,000,372
Deferred ceding commission revenue		2,643,403			2,374,616
Other		-			17,087
Total deferred tax assets		4,603,575			4,083,935
Deferred tax liability:
Investment in KICO (2)		1,169,000			1,169,000
Deferred acquisition costs		2,718,674			2,332,489
Intangibles		840,272			921,143
Depreciation and amortization		166,731			197,223
Net unrealized appreciation of securities - available for sale		634,963			157,167
Other		11,294			-
Total deferred tax liabilities		5,540,934			4,777,022
Net deferred income tax liability	$	(937,359	)	$	(693,087	)

Losses subject to Annual Limitation

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

	June 30,			December 31,
Type of NOL	2014			2013			Expiration
State only (A)	$	508,135		$	459,989			December 31, 2034
Valuation allowance		(269,943	)		(240,713	)
State only, net of valuation allowance		238,192			219,276
Amount subject to Annual Limitation, federal only (B)		17,000			27,200			December 31, 2019
Total deferred tax asset from net operating loss carryovers	$	255,192		$	246,476