8. Income Taxes

The components of income tax expense for the years ended December 31 are summarized as follows:

For the Years Ended December 31,	2012	2011
Current:
Federal	$ 5,018,000	$ 2,515,000
State	163,000	29,000
Total current	5,181,000	2,544,000
Deferred:
Federal	(305,525)	28,131
State	13,525	(7,131)
Total deferred	(292,000)	21,000
Total	$ 4,889,000	$ 2,565,000

For state income tax purposes, ITIC and NITIC generally pay only a gross premium tax found in premium and retaliatory taxes in the Consolidated Statements of Income.

At December 31, the approximate tax effect of each component of deferred income tax assets and liabilities is summarized as follows:

For the Years Ended December 31,	2012	2011
Deferred income tax assets:
Accrued benefits and retirement services	$ 2,889,350	$ 2,491,168
Postretirement benefit obligation	52,791	28,026
Other-than-temporary impairment of assets	344,701	434,929
Reinsurance and commissions payable	19,087	38,969
Allowance for doubtful accounts	641,920	414,120
Net operating loss carryforward	12,000	30,000
Capital loss carryforward	0	5,194
Excess of book over tax depreciation	143,184	113,648
Other	410,052	491,479
Total	4,513,085	4,047,533
Deferred income tax liabilities:
Recorded reserves for claims, net of statutory premium reserves	399,217	290,318
Net unrealized gain on investments	4,687,264	3,956,708
Discount accretion on tax-exempt obligations	2,038	0
Other	317,722	279,870
Total	5,406,241	4,526,896
Net deferred income tax liabilities	$ (893,156)	$ (479,363)

At December 31, 2012 and 2011, no valuation allowance was recorded. Based upon the Company's historical results of operations, the existing financial condition of the Company and management's assessment of all other available information, management believes that it is more likely than not that the benefit of these deferred income tax assets will be realized.

A reconciliation of income tax as computed for the years ended December 31 at the U.S. federal statutory income tax rate (34%) to income tax expense follows:

For the Years Ended December 31,	2012	2011
Anticipated income tax expense	$ 5,467,168	$ 3,229,638
Increase (decrease) related to:
State income taxes, net of federal income tax benefit	107,580	19,140
Tax-exempt interest income (net of amortization)	(757,005)	(700,300)
Other, net	71,257	16,522
Provision for income taxes	$ 4,889,000	$ 2,565,000

In accounting for uncertainty in income taxes, the Company is required to recognize in its financial statements the impact of a tax position if that position is more likely than not of being sustained on an audit, based on the technical merits of the position. In this regard, an uncertain tax position represents the Company's expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. There were no unrecognized tax benefits or liabilities as of December 31, 2012.

The amount of unrecognized tax benefit or liability may increase or decrease in the future for various reasons, including adding amounts for current tax year positions, expiration of open income tax returns due to the expiration of the applicable statute of limitations, changes in management's judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the additions or eliminations of uncertain tax positions.

The Company's policy is to report interest and penalties related to income taxes in the Other line item in the Consolidated Statements of Income.

The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal or state and local examinations by taxing authorities for years before 2008.