INCOME TAXES

Temporary differences between the consolidated financial statement carrying amount and tax basis of assets and liabilities that give rise to significant portions of the deferred income tax asset (liability) at December 31, 2013 and 2012 are as follows:



	December 31,
	2013			2012
Loss reserve discounting	$	17,689,763		$	18,669,516
Unearned premium reserve limitation	14,764,266			13,372,124
Retirement benefits	—			9,388,387
Other policyholders' funds payable	2,971,863			2,119,289
Other, net	1,761,100			1,726,687
Total deferred income tax asset	37,186,992			45,276,003
Net unrealized holding gains on investment securities	(26,048,567		)	(37,587,475		)
Deferred policy acquisition costs	(13,227,355		)	(12,048,958		)
Retirement benefits	(8,234,255		)	—
Other, net	(2,498,475		)	(1,992,260		)
Total deferred income tax liability	(50,008,652		)	(51,628,693		)
Net deferred income tax liability	$	(12,821,660	)	$	(6,352,690	)

Based upon anticipated future taxable income and consideration of all other available evidence, management believes that it is “more likely than not” that the Company’s deferred income tax assets will be realized.

The actual income tax expense (benefit) for the years ended December 31, 2013, 2012 and 2011 differed from the “expected” income tax expense (benefit) for those years (computed by applying the United States federal corporate tax rate of 35 percent to income (loss) before income tax expense (benefit)) as follows:



	Year ended December 31,
	2013			2012			2011
Computed "expected" income tax expense (benefit)	$	21,298,347		$	18,071,765		$	(3,847,032	)
Increases (decreases) in tax resulting from:
Tax-exempt interest income	(3,828,441		)	(4,432,861		)	(4,636,716		)
Dividends received deduction	(876,421		)	(722,900		)	(516,691		)
Proration of tax-exempt interest and dividends received deduction	705,729			773,364			773,011
Other, net	34,533			(22,183		)	(26,810		)
Total income tax expense (benefit)	$	17,333,747		$	13,667,185		$	(8,254,238	)

Comprehensive income tax expense (benefit) included in the consolidated financial statements for the years ended December 31, 2013, 2012 and 2011 is as follows:



	Year ended December 31,
	2013			2012		2011
Income tax expense (benefit) on:
Operations	$	17,333,747		$	13,667,185	$	(8,254,238	)
Change in unrealized holding gains on investment securities	(11,538,908		)	10,043,215		7,463,995
Change in funded status of retirement benefit plans:
Pension plans	5,497,946			597,802		(3,132,777		)
Postretirement benefit plans	12,103,023			349,988		(2,799,278		)
Comprehensive income tax expense (benefit)	$	23,395,808		$	24,658,190	$	(6,722,298	)

The Company had no provision for uncertain income tax positions at December 31, 2013 or 2012. The Company recognized $3,359 of interest income related to U.S. federal income taxes during 2012. The Company did not recognize any interest expense or other penalties related to U.S. federal or state income taxes during 2013, 2012 or 2011. It is the Company’s accounting policy to reflect income tax penalties as other expense, and interest as interest expense.

The Company files a U.S. federal income tax return, along with various states income tax returns. The Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2010. The Company's 2011 income tax return has been audited and no adjustments were proposed.