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Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Taxes  
Income Tax Disclosure [Text Block]
8)      Income Taxes


The Company’s income tax liability (benefit) at December 31 is summarized as follows:
 
   
December 31,
 
   
2011
  
2010
 
Current
 $(977,420) $21,224 
Deferred
  15,987,699   15,334,961 
Total
 $15,010,279  $15,356,185 
 
Significant components of the Company’s deferred tax (assets) and liabilities at December 31 are approximately as follows:
  
   
December 31,
 
   
2011
  
2010
 
Assets
      
Future policy benefits
 $(4,597,137) $(6,195,069)
Loan loss reserve
  (1,210,791)  (2,005,669)
Unearned premium
  (1,861,264)  (1,929,161)
Available for sale securities
  (116,501)  -- 
Other
  (2,605,315)  (1,064,441)
Less: Valuation allowance
  3,640,327   6,105,175 
Total deferred tax assets
  (6,750,681)  (5,089,165)
          
Liabilities
        
Deferred policy acquisition costs
  9,526,785   9,503,086 
Basis difference in property and equipment
  3,917,124   2,873,142 
Value of business acquired
  4,077,709   3,336,548 
Installment sales
  1,996,967   2,172,164 
Trusts
  2,385,770   2,014,812 
Available for sale securities
  --   24,632 
Tax on unrealized appreciation
  834,025   499,742 
Total deferred tax liabilities
  22,738,380   20,424,126 
Net deferred tax liability
 $15,987,699  $15,334,961 
 
Insurance companies with total assets less than $500 million receive a special deduction that lowers their effective tax rate. The Company’s valuation allowance relates to differences created by the small life insurance company deduction. If the Company exceeds $500 million in consolidated tax assets, for tax purposes, this valuation allowance would diminish.


The decrease in the valuation allowance was $2,464,848 and $622,085 during 2011 and 2010, respectively.


The Company paid $174,811, $108,522, and $750,844 in income taxes for 2011, 2010 and 2009, respectively.
 
The Company’s income tax expense (benefit) is summarized as follows for the years ended December  31:
   
2011
  
2010
  
2009
 
Current
 $130,526  $171,133  $1,002,789 
Deferred
  (192,731)  (829,929)  1,366,336 
Other
  -   -   204,653 
Total
 $(62,205) $(658,796) $2,573,778 


The reconciliation of income tax expense at the U.S. federal statutory rates is as follows:

   
2011
  
2010
  
2009
 
Computed expense at statutory rate
 $410,225  $(370,403) $2,158,204 
Special deductions allowed
            
small life insurance companies
  (503,672)  (351,847)  (50,983)
Other, net
  31,242   63,454   466,557 
Tax expense (benefit)
 $(62,205) $(658,796) $2,573,778 
 
At December 31, 2011, the Company had $534,403 of unrecognized tax benefits principally relating to tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.  At December 31, 2011, the Company had $37,426 in interest and penalties related to unrecognized tax benefits. The Company accounts for interest expense and penalties for unrecognized tax benefits as part of its income tax provision.  Because of the impact of deferred tax accounting, other than interest and penalties, the disallowance of the shorter deductibility period would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. As of December 31, 2011, the Company does not expect any material changes to the estimated amount of unrecognized tax benefits in the next twelve months. Federal and state income tax returns for 2008 through 2011 are open tax years.