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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Provision for Income Tax

Our provision for income tax expense (benefit) for 2019, 2018 and 2017 consisted of the following:

		2019				2018				2017
Current federal income tax		$	8,454,358			$	(11,296,704	)		$	(2,139,061	)
Deferred federal income tax			649,928				(4,179,805	)			7,137,423
Federal income tax expense (benefit)		$	9,104,286			$	(15,476,509	)		$	4,998,362
Pennsylvania income tax			825,000				—				—
Income tax expense (benefit)		$	9,929,286			$	(15,476,509	)		$	4,998,362

Reconciliation of Federal Income Tax Rate

The reasons for such difference and the related tax effects are as follows:

		2019				2018				2017
Income (loss) before income taxes		$	57,081,030			$	(48,236,849	)		$	12,114,462
Computed “expected” taxes			11,987,016				(10,129,738	)			4,240,062
Tax-exempt interest			(1,325,197	)			(1,521,090	)			(3,241,530	)
Proration			357,044				405,204				518,948
Effect of tax reform			—				—				4,752,547
Dividends received deduction			(1,913,238	)			(99,726	)			(508,409	)
Net operating loss carryback			—				(4,210,523	)			—
Tax benefit on exercise of options			(64,765	)			(25,938	)			(873,515	)
Other, net			236,676				105,302				110,259
Pennsylvania income tax, net of federal benefit			651,750				—				—
Income tax expense (benefit)		$	9,929,286			$	(15,476,509	)		$	4,998,362

Schedule of Deferred Tax Assets and Deferred Tax Liabilities

The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and deferred tax liabilities at December 31, 2019 and 2018 are as follows:

		2019				2018
Deferred tax assets:
Unearned premium		$	15,482,366			$	15,634,433
Loss reserves			7,820,683				7,644,415
Net operating loss carryforward			200,942				3,090,010
Net state operating loss carryforward—DGI Parent			7,519,991				8,070,196
Net unrealized losses			—				3,782,145
Other			2,603,155				2,517,791
Total gross deferred tax assets			33,627,137				40,738,990
Less valuation allowance			(7,538,024	)			(8,334,663	)
Net deferred tax assets			26,089,113				32,404,327
Deferred tax liabilities:
Deferred policy acquisition costs			12,449,820				12,729,176
Loss reserve transition adjustment			1,733,056				2,339,068
Other			3,391,926				4,266,328
Total gross deferred tax liabilities			17,574,802				19,334,572
Net deferred tax asset		$	8,514,311			$	13,069,755

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Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

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Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

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