Income Tax Matters (Tables)

3 Months Ended

Mar. 31, 2020

Schedule of deferred tax assets and liabilities

Significant components of the Company’s deferred tax assets and liabilities as of March 31, 2020 and December 31, 2019 are as follows:


	March 31, 2020		December 31, 2019
Deferred tax assets:
Loss carryforwards	$	427,075	$	436,777
Capitalized costs		210,030		221,918
Stock option granted		7,072		4,566
Unrealized losses on investments		5,568,896		—
Policy acquisition costs		1,728,134		1,468,030
Charitable contribution carryforward		1,230		1,020
Property and equipment		23,362		15,508
Benefit reserves		1,338,072		848,643
Total deferred tax assets		9,303,871		2,996,462
Less valuation allowance		(4,156,035)		(2,618,741)
Total deferred tax assets, net of valuation allowance		5,147,836		377,721
Deferred tax liabilities:
Unrealized losses on investments		4,880,173		116,088
Due premiums		84,076		81,789
Intangible assets		147,000		147,000
Policy loans		36,587		32,844
Property and equipment		—		—
Total deferred tax liabilities		5,147,836		377,721
Net deferred tax assets	$	—	$	—

Schedule of effective tax rate reconciliation

There was income tax expense of $407,916 for the three months ended March 31, 2020 and no income tax expense for the three months ended March 31, 2019. 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 March 31,
	2020		2019
Computed expected income tax benefit	$	4,610,839	$	(313,954)
Increase (reduction) in income taxes resulting from:
Meals, entertainment and political contributions		2,611		2,583
Change in valuation allowance		(4,147,690)		234,398
Other		(57,844)		76,973
Subtotal of increases		(4,202,923)		313,954
Tax expense (benefit)		407,916		—