INCOME TAXES

The actual income tax expense (benefit) for the three and six months ended June 30, 2019 and 2018 differed from the “expected” income tax expense (benefit) for those periods (computed by applying the United States federal corporate tax rate of 21 percent to income (loss) before income tax expense (benefit)) as follows:



	Three months ended June 30,						Six months ended June 30,
($ in thousands)	2019			2018			2019			2018
Computed "expected" income tax expense (benefit)	$	345		$	(1,622	)	$	9,225		$	(1,733	)
Increases (decreases) in tax resulting from:
Incremental benefit of net operating loss carry back	—			(839		)	—			(839		)
Tax-exempt interest income	(269		)	(297		)	(552		)	(607		)
Dividends received deduction	(166		)	(151		)	(298		)	(274		)
Proration of tax-exempt interest and dividends received deduction	108			112			212			220
Nondeductible expenses	374			30			419			55
Internal Revenue Code 50(d)(5) income from investment tax credits	(111		)	(36		)	110			—
Other, net	75			76			(6		)	(1		)
Total income tax expense (benefit)	$	356		$	(2,727	)	$	9,110		$	(3,179	)

Pursuant to Staff Accounting Bulletin No. 118 issued by the Securities and Exchange Commission, the Company made reasonable estimates of the effects the Tax Cuts and Jobs Act (TCJA) had on deferred income tax assets and liabilities at December 31, 2017 and the interim periods in 2018. For items where the Company could not make a reasonable estimate, primarily loss reserve discounting, the Company used existing accounting guidance and the provisions of the tax laws that were in place prior to the enactment. Subsequently, the Company made its determination of the effects of the TCJA when the Internal Revenue Service (IRS) issued Revenue Procedure 2019-06, which provided applicable discount factors for both the transition obligation (reserves at January 1, 2018), and reserves at December 31, 2018. On July 22, 2019, the IRS issued Revenue Procedures 2019-30 and 2019-31, which provide additional guidance with regards to loss reserve discounting and the transition obligation pursuant to the TCJA. The Company is analyzing the effects of this most recent guidance. The Company does not expect any potential changes to have a material impact on the consolidated financial statements.

The Company had no provision for uncertain income tax positions at June 30, 2019 or December 31, 2018. The Company recognized no interest expense or other penalties related to U.S. federal or state income taxes during the six months ended June 30, 2019 or 2018. 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 2015.