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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes

9) Income Taxes

 

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

 

   2022   2021 
   December 31 
   2022   2021 
Current  $16,352,190   $(1,558,687)
Deferred   14,358,337    32,594,783 
Total  $30,710,527   $31,036,096 

 

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

 

   2022   2021 
   December 31 
   2022   2021 
Assets        
Future policy benefits  $(13,974,221)  $(13,015,255)
Loan loss reserve   (448,673)   (636,256)
Unearned premium   (582,459)   (642,755)
Net operating loss   (237,855)   (898,029)
Deferred compensation   (2,166,593)   (2,750,406)
Deposit obligations   (631,232)   (635,878)
Tax on unrealized appreciation   (2,590,726)   - 
Other   (601,335)   (1,712,895)
Less: Valuation allowance   1,506,144    882,535 
Total deferred tax assets   (19,726,950)   (19,408,939)
           
Liabilities          
Deferred policy acquisition costs   17,511,778    17,166,200 
Basis difference in property, equipment and real estate   11,959,391    9,247,242 
Value of business acquired   2,058,785    1,768,501 
Deferred gains   1,490,946    15,598,360 
Trusts   1,064,387    1,064,387 
Tax on unrealized appreciation   -    7,159,032 
Total deferred tax liabilities   34,085,287    52,003,722 
Net deferred tax liability  $14,358,337   $32,594,783 

 

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, 2022 and 2021

 

9) Income Taxes (Continued)

 

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

 

   2022   2021 
   December 31 
   2022   2021 
Current          
Federal  $15,346,331   $629,921 
State   3,294,234    343,428 
Total Current Income Tax Expense (Benefit)   18,640,565    973,349 
           
Deferred          
Federal   (7,400,620)   9,832,556 
State   (2,553,385)   1,475,880 
Total Deferred Income Tax Expense (Benefit)   (9,954,005)   11,308,436 
Total  $8,686,560   $12,281,785 

 

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

 

   2022   2021 
   December 31 
   2022   2021 
Computed expense at statutory rate  $7,219,141   $10,878,163 
State tax expense, net of federal tax benefit   585,269    1,437,255 
Change in valuation allowance   623,609    (79,385)
Other, net   258,541    45,752 
Income tax expense  $8,686,560   $12,281,785 

 

The Company’s overall effective tax rate for the years ended December 31, 2022 and 2021 was 25.3% and 23.7% 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 an increase to the valuation allowance related to Kilpatrick Life Insurance Company. The increase in the effective tax rate when compared to the prior year is partially due to an increase to the valuation allowance in the current period when compared to the prior period year.

 

At December 31, 2022, the Company had no significant unrecognized tax benefits. As of December 31, 2022, 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 2019 through 2022 are subject to examination by taxing authorities.

 

Net Operating Losses and Tax Credit Carryforwards:

 

Year of Expiration     
2023  $- 
2024   - 
2025   - 
2026   - 
2027   - 
Thereafter up through 2037   1,070,413 
Indefinite carryforwards   - 
   $1,070,413 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2022 and 2021