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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes

9) Income Taxes

 

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

 

   2023   2022 
   December 31, 
   2023   2022 
Current  $246,437   $16,352,190 
Deferred   13,506,544    14,358,337 
Total  $13,752,981   $30,710,527 

 

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

 

   2023   2022 
   December 31, 
   2023   2022 
Assets          
Future policy benefits  $14,902,816  $14,605,453
Loan loss reserve   142,281   448,673
Unearned premium   534,203   582,459
Net operating loss   1,050,770   237,855
Deferred compensation   2,138,385   2,166,593
Tax on unrealized appreciation   491,271   2,590,726
Other   917,335   601,335
Less: Valuation allowance   -    (1,506,144)
Total deferred tax assets   20,177,061   19,726,950
           
Liabilities          
Deferred policy acquisition costs   18,478,562    17,511,778 
Basis difference in property, equipment and real estate   11,054,092    11,959,391 
Value of business acquired   1,778,199    2,058,785 
Deferred gains   1,308,365    1,490,946 
Trusts   1,064,387    1,064,387 
Total deferred tax liabilities   33,683,605    34,085,287 
Net deferred tax liability  $13,506,544   $14,358,337 

 

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, 2023 and 2022

 

9) Income Taxes (Continued)

 

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

 

   2023   2022 
   December 31, 
   2023   2022 
Current          
Federal  $4,091,306   $15,346,331 
State   209,537    3,294,234 
Total Current Income Tax Expense (Benefit)   4,300,843    18,640,565 
           
Deferred          
Federal   (2,139,124)   (7,400,620)
State   (356,365)   (2,553,385)
Total Deferred Income Tax Expense (Benefit)   (2,495,489)   (9,954,005)
Total  $1,805,354   $8,686,560 

 

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

 

   2023   2022 
   December 31, 
   2023   2022 
Computed expense at statutory rate  $3,423,086   $7,219,141 
State tax expense (benefit), net of federal tax benefit   (115,994)   585,269 
Change in valuation allowance   (1,506,144)   623,609 
Other, net   4,406    258,541 
Income tax expense  $1,805,354   $8,686,560 

 

The Company’s overall effective tax rate for 2023 and 2022 was 11.1% and 25.3% 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 related to Kilpatrick Life Insurance Company. The decrease in the effective tax rate when compared to the prior year is partially due to a decrease to the valuation allowance in the current period when compared to the prior period year.

 

As of December 31, 2023, the Company had no significant unrecognized tax benefits. As of December 31, 2023, 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 2020 through 2023 are subject to examination by taxing authorities.

 

Net Operating Losses and Tax Credit Carryforwards:
     
Year of Expiration     
2024  $- 
2025   - 
2026   - 
2027   - 
2028   - 
Thereafter up through 2038   903,042 
Indefinite carryforwards   2,396,389 
   $3,299,431 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2023 and 2022