Income Tax Matters (Tables)

9 Months Ended

Sep. 30, 2019

Schedule of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities as of September 30, 2019 and December 31, 2018 are as follows:


	September 30, 2019		December 31, 2018
Deferred tax assets:
Loss carryforwards	$	1,062,759	$	1,429,458
Capitalized costs		233,806		269,472
Unrealized losses on investments		—		390,349
Policy acquisition costs		661,065		—
Charitable contribution carryforward		2,394		—
Property and equipment		15,508		—
Benefit reserves		565,405		192,858
Total deferred tax assets		2,540,937		2,282,137
Less valuation allowance		(2,210,492)		(1,928,454)
Total deferred tax assets, net of valuation allowance		330,445		353,683
Deferred tax liabilities:
Unrealized losses on investments		74,080		—
Due premiums		83,754		117,144
Intangible assets		147,000		147,000
Policy loans		25,611		86,245
Property and equipment		—		3,294
Total deferred tax liabilities		330,445		353,683
Net deferred tax assets	$	—	$	—

Schedule of Effective Tax Rate Reconciliation

There was income tax expense of $114,642 for the nine months ended September 30, 2019 and no income tax expense for the nine months ended September 30, 2018. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 21% to pretax income, as a result of the following:


	Three months ended September 30,				Nine months ended September 30,
	2019		2018		2019		2018
Computed expected income tax benefit	$	(325,116)	$	(477,395)	$	(813,759)	$	(764,779)
Increase (reduction) in income taxes resulting from:
Meals, entertainment and political contributions		(1,778)		1,628		3,858		5,832
Change in loss carryforward due to 382 limitation		—		202,994		—		5,735,023
COD Interest		—		—		177,563		—
Other		(38,325)		(54,442)		512		(89,110)
		(40,103)		150,180		181,933		5,651,745
Tax benefit before valuation allowance		(365,219)		(327,215)		(631,826)		4,886,966
Change in valuation allowance		479,861		327,215		746,468		(4,886,966)
Net income tax expenses	$	114,642	$	—	$	114,642	$	—