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Income Taxes
 12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Taxes

9) Income Taxes

 

The Company’s income tax liability is summarized as follows:

 

   2021   2020 
   December 31 
   2021   2020 
Current  $(1,558,687)  $2,595,877 
Deferred   32,594,783    22,662,923 
Total  $31,036,096   $25,258,800 

 

Significant components of the Company’s deferred tax (assets) and liabilities are approximately as follows:

 

   2021   2020 
   December 31 
   2021   2020 
Assets        
Future policy benefits  $(13,015,255)  $(12,657,045)
Loan loss reserve   (636,256)   (5,352,942)
Unearned premium   (642,755)   (699,011)
Net operating loss   (898,029)   (334,085)
Deferred compensation   (2,750,406)   (2,833,298)
Deposit obligations   (635,878)   (610,041)
Other   (1,712,895)   (1,269,533)
Less: Valuation allowance   882,535    961,920 
Total deferred tax assets   (19,408,939)   (22,794,035)
           
Liabilities          
Deferred policy acquisition costs   17,166,200    16,430,001 
Basis difference in property, equipment and real estate   9,247,242    5,312,787 
Value of business acquired   1,768,501    1,880,602 
Deferred gains   15,598,360    12,124,226 
Trusts   1,064,387    1,064,387 
Tax on unrealized appreciation   7,159,032    8,644,955 
Total deferred tax liabilities   52,003,722    45,456,958 
Net deferred tax liability  $32,594,783   $22,662,923 

 

The valuation allowance relates to differences between recorded deferred tax assets and liabilities and ultimate anticipated realization.

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

 

9) Income Taxes (Continued)

 

The Company’s income tax expense is summarized as follows:

 

   2021   2020 
   December 31 
   2021   2020 
Current        
Federal  $629,921   $10,678,612 
State   343,428    2,320,233 
Total Current Income Tax Expense (Benefit)   973,349    12,998,845 
           
Deferred          
Federal   9,832,556    2,677,943 
State   1,475,880    176,726 
Total Deferred Income Tax Expense (Benefit)   11,308,436    2,854,669 
Total  $12,281,785   $15,853,514 

 

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

 

   2021   2020 
   December 31 
   2021   2020 
Computed expense at statutory rate  $10,878,163   $15,004,527 
State tax expense, net of federal tax benefit   1,437,255    1,972,598 
Change in valuation allowance   (79,385)   (1,477,474)
Other, net   45,752    353,863 
Income tax expense  $12,281,785   $15,853,514 

 

The Company’s overall effective tax rate for the years ended December 31, 2021 and 2020 was 23.7% and 22.2% respectively. The Company’s effective tax rates differ from the U.S. federal statutory rate of 21% partially due to its provision for state income taxes and a decrease to the valuation allowance. The increase in the effective tax rate when compared to the prior year is partially due to a smaller decrease to the valuation allowance in the current period when compared to the prior period year.

 

At December 31, 2021, the Company had no significant unrecognized tax benefits. As of December 31, 2021, 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 2018 through 2021 are subject to examination by taxing authorities.

 

Net Operating Losses and Tax Credit Carryforwards:

 

Year of Expiration    
2022  $- 
2023   - 
2024   - 
2025   - 
2026   - 
Thereafter up through 2037   1,237,784 
Indefinite carryforwards   2,742,661 
   $3,980,445 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020