Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes [Abstract]

Income Taxes

15. Income Taxes:

The composition of deferred tax assets and liabilities and the related tax effects as of December 31, 2022 and 2021, are as follows (in thousands):

	2022		2021
Deferred tax liabilities:
Deferred policy acquisition costs	$	(2)	$	(1,431)
Net unrealized holding gain on investments		—		(1,781)
Agency relationship		—		(5)
Rent reserve		(48)		—
Fixed assets		(651)		(927)
Other		(90)		(167)
Total deferred tax liabilities		(791)		(4,311)
Deferred tax assets:
Unearned premiums		2,335		5,796
Net unrealized holding loss on investments		1,968		—
Intangible assets		—		192
Pension liability		687		683
Net operating loss carry-forward		20,139		124
Unpaid loss and loss adjustment expense		5,817		5,375
Rent reserve		—		3
Bonus accrual		526		312
Deferred social security tax		—		178
Investment impairments		74		217
Other		407		337
Total deferred tax assets		31,953		13,217
Net deferred tax assets before valuation allowance		31,162		8,906
Less: valuation allowance		31,162		—
Net deferred tax asset	$	—	$	8,906

We determined that it is more likely than not that our deferred tax assets will not be recoverable as of December 31, 2022. If, in the future, we determine we can support the recoverability of all or a portion of the deferred tax assets under the guidance, the tax benefits relating to any reversal of the valuation allowance on deferred tax assets will be accounted for as a reduction of income tax expense and result in an increase in equity. The Company concluded that no valuation allowance was necessary against our deferred tax assets as of December 31, 2021.

A reconciliation of the income tax provisions based on the applicable statutory tax rate of 21% to the provisions reflected in the consolidated financial statements for the years ended December 31, 2022 and 2021, respectively, is as follows (in thousands):

	2022		2021
Computed expected income tax (benefit) expense at statutory tax rate:
From continuing operations	$	(26,685)	$	(2,617)
From discontinued operations		6,273		5,031
Meals and entertainment		33		34
Tax exempt interest		(199)		(234)
Dividends received deduction		(161)		(190)
Goodwill		—		—
State taxes (net of federal benefit)		416		208
Rate differential on NOL		—		—
Valuation allowance		31,162		—
Other		72		259
Income tax expense	$	10,911	$	2,491
Current income tax expense	$	22	$	2,297
Deferred tax expense		10,889		194
Income tax expense	$	10,911	$	2,491

We have available, for federal income tax purposes, unused net operating loss carryforwards of $95.9 million at December 31, 2022. The Tax Cuts and Jobs Act of 2017 (“TCJA”) generally repealed the previous two year carry-back and 20 year carry-forward provision for net operating losses and adopted an indefinite carry-forward of net operating losses arising in tax years ending after December 31, 2017. However, the TCJA preserved present law for net operating losses of property/casualty insurance companies. Thus, our net operating losses may be carried-back two years and carried-forward 20 years.

The net operating losses will expire if unused, as follows (in thousands):

Year
2022	$	—
2028		2
2029		25
2031		45
2032		77
2033		73
2034		59
2035		33
2036		50
2037		29
2038		40
2039		70
2040		60
2041		20
2042		79,438
Indefinite		15,877
	$	95,898

We are no longer subject to U.S. federal, state, local or non-U.S. income tax examinations by tax authorities for years prior to 2018. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions at December 31, 2022.