INCOME TAXES

The actual income tax expense (benefit) for the three and nine months ended September 30, 2014 and 2013 differed from the “expected” income tax expense (benefit) for those periods (computed by applying the United States federal corporate tax rate of 35 percent to income before income tax expense (benefit)) as follows:



	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Computed "expected" income tax expense	$	659		$	3,348		$	5,965		$	13,308
Increases (decreases) in tax resulting from:
Tax-exempt interest income	(757		)	(961		)	(2,559		)	(2,897		)
Dividends received deduction	(247		)	(221		)	(725		)	(638		)
Proration of tax-exempt interest and dividends received deduction	151			188			493			541
Other, net	(152		)	11			30			24
Income tax expense (benefit)	$	(346	)	$	2,365		$	3,204		$	10,338

The Company had no provision for uncertain income tax positions at September 30, 2014 or December 31, 2013. The Company did not recognize any interest or other penalties related to U.S. federal or state income taxes during the three or nine months ended September 30, 2014 or 2013. 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 state income tax returns. The Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2011. The Company’s 2011 income tax return has been audited and no adjustments were proposed.