Income Taxes

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



For the Years Ended December 31,	2016		2015		2014
Current:
Federal	$	5,745,000	$	4,179,000	$	3,121,000
State	81,000		34,000		84,000
Total current	5,826,000		4,213,000		3,205,000
Deferred:
Federal	2,755,777		976,624		620,156
State	34,223		38,376		(9,156		)
Total deferred	2,790,000		1,015,000		611,000
Total	$	8,616,000	$	5,228,000	$	3,816,000

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,	2016			2015
Deferred income tax assets:
Accrued benefits and retirement services	$	3,625,943		$	3,266,823
Other-than-temporary impairment of assets	429,167			428,614
Allowance for doubtful accounts	122,477			1,205,735
Postretirement benefit obligation	56,259			59,108
Net operating loss carryforward	15,000			22,000
Reinsurance and commission payable	7,935			13,752
Other	410,400			416,401
Total	4,667,181			5,412,433
Deferred income tax liabilities:
Net unrealized gain on investments	6,207,324			6,073,431
Recorded reserve for claims, net of statutory premium reserves	4,985,984			3,322,336
Intangible assets	2,525,511			37,451
Excess of tax over book depreciation	1,303,710			987,765
Other	762,908			694,456
Total	15,785,437			11,115,439
Net deferred income tax liabilities	$	(11,118,256	)	$	(5,703,006	)

At December 31, 2016 and 2015, 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 of 34.6% for 2016, 34.4% for 2015 and 34.3% for 2014, respectively, to income tax expense follows:



For the Years Ended December 31,	2016			2015			2014
Anticipated income tax expense	$	9,733,482		$	6,115,306		$	4,626,555
Increase (decrease) related to:
State income taxes, net of federal income tax benefit	52,974			22,304			55,188
Tax-exempt interest income (net of amortization)	(1,074,504		)	(981,712		)	(876,365		)
Other, net	(95,952		)	72,102			10,622
Provision for income taxes	$	8,616,000		$	5,228,000		$	3,816,000

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, 2016.

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 2013.