Income Tax Matters

6 Months Ended

Jun. 30, 2015

Note 4. Income Tax Matters

Significant components of the Company's deferred tax assets and liabilities as of June 30, 2015 and December 31, 2014 are as follows:

	June 30, 2015			December 31, 2014
Deferred tax assets:
Loss carry forwards	$	8,207,624		$	7,598,830
Capitalized costs		705,760			802,000
Unrealized losses on investments		303,840			121,110
Benefit reserves		1,107,309			1,239,298
Total deferred tax assets		10,324,533			9,761,238
Less valuation allowance		(8,564,853	)		(8,112,743	)
Total deferred tax assets, net of valuation allowance		1,759,680			1,648,495
Deferred tax liabilities:
Policy acquisition costs		717,524			908,021
Due premiums		218,808			220,823
Value of business acquired		563,248			249,351
Intangible assets		238,000			238,000
Property and equipment		22,100			32,300
Total deferred tax liabilities		1,759,680			1,648,495
Net deferred tax assets	$	-		$	-

At June 30, 2015 and December 31, 2014, the Company recorded a valuation allowance of $8,564,853 and $8,112,743, 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 June 30, 2015, have expiration dates that range from 2024 through 2030.

There was no income tax expense for the three or six months ended June 30, 2015 and 2014. 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:

	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Computed expected income tax benefit	$	(279,849	)	$	(528,806	)	$	(545,090	)	$	(778,994	)
Increase (reduction) in income taxes resulting from:
Meals, entertainment and political contributions		12,862			6,512			16,534			13,926
Dividends received deduction		(38	)		-			(44	)		-
Noncontrolling interests		-			(15,761	)		-			3,196
True-up of benefit reserves		193,054			99,440			259,220			38,499
		205,878			90,191			275,710			55,621
Tax benefit before valuation allowance		(73,971	)		(438,615	)		(269,380	)		(723,373	)
Change in valuation allowance		73,971			438,615			269,380			723,373
Net income tax expense	$	-		$	-		$	-		$	-