Income Tax Matters

12 Months Ended

Dec. 31, 2013

Note 5. Income Tax Matters

Significant components of the Company's deferred tax assets and liabilities as of December 31, 2013 and 2012 are as follows:

	December 31, 2013			December 31, 2012
Deferred tax assets:
Loss carryforwards	$	6,594,919		$	6,061,739
Capitalized costs		821,248			898,240
Unrealized losses on investments		252,196			28,181
Benefit reserves		1,235,692			1,157,055
Total deferred tax assets		8,904,055			8,145,215
Less valuation allowance		(7,132,984	)		(6,208,648	)
Total deferred tax assets, net of valuation allowance		1,771,071			1,936,567
Deferred tax liabilities:
Policy acquisition costs		978,902			1,018,676
Due premiums		222,067			278,842
Value of business acquired		279,402			327,949
Intangible assets		238,000			238,000
Property and equipment		52,700			73,100
Total deferred tax liabilities		1,771,070			1,936,567
Net deferred tax assets	$	-		$	-

At December 31, 2013 and 2012, the Company recorded a valuation allowance of $7,132,984 and $6,208,648, respectively, on the deferred tax assets to reduce the total to an amount that management believes will ultimately be realized. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carryforwards are expected to be available to reduce taxable income.

Loss carryforwards for tax purposes as of December 31, 2013, have expiration dates that range from 2024 through 2028.

There was no income tax expense for the years ended December 31, 2013 and 2012. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 34% to pretax income, as a result of the following:

	Year Ended December 31,
	2013			2012
Computed expected income tax benefit	$	(669,045	)	$	(563,614	)
Increase (reduction) in income taxes resulting from:
Meals, entertainment and political contributions		29,497			21,585
Dividends received deduction		(5,452	)		(20,284	)
True-up of provision to actual		-			(110,899	)
Deconsolidation of Hot Dot, Inc.		-			(336,566	)
Noncontrolling interests		(17,632	)		-
Other		(37,689	)		105,426
		(31,276	)		(340,738	)
Tax benefit before valuation allowance		(700,321	)		(904,352	)
Change in valuation allowance		700,321			904,352
Net income tax expense	$	-		$	-

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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