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Income Taxes | 12 Months Ended
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Dec. 31, 2011
Income Taxes [Abstract] |
Income Taxes |
Note 5. | Income Taxes
Total income taxes were allocated as follows:
|  |  |  |  | Restated |
|  | 2011 |  |  | 2010 |
Total tax expense (benefit) on income |  | $ | 25 |  |  | $ | (369 | )
Tax expense (benefit) on components of shareholders' equity: |  |  |  |  |  |  |  |
Net unrealized gains on investment securities |  |  | 6,681 |  |  |  | 2,587 |
Fair value adjustment to derivative financial instrument |  |  | 237 |  |  |  | (2 | )
Total tax expense on shareholders' equity |  |  | 6,918 |  |  |  | 2,585 |
Total tax expense |  | $ | 6,943 |  |  | $ | 2,216 |
A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and the income tax expense (benefit) is as follows:
|  |  |  |  | Restated |
|  | 2011 |  |  | 2010 |
Federal income tax provision at statutory rate of 35% |  | $ | 1,160 |  |  | $ | 217 |
Dividends received deduction |  |  | (173 | ) |  |  | (193 | )
Small life insurance company deduction |  |  | (617 | ) |  |  | (232 | )
Other |  |  | 18 |  |  |  | 39 |
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets |  |  | (412 | ) |  |  | (92 | )
Adjustment for prior years' estimates to actual |  |  | 49 |  |  |  | (108 | )
Income tax expense (benefit) |  | $ | 25 |  |  | $ | (369 | )
The primary differences between the effective tax rate and the federal statutory income tax rate resulted from the dividends-received deduction (“DRD”), the small life insurance company deduction (“SLD”) and the change in deferred tax asset valuation allowance. The current year estimated DRD is adjusted as underlying factors change and can vary from estimates based on, but not limited to, actual distributions from these investments as well as appropriate levels of taxable income. The SLD varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income (“LICTI”). The amount of the SLD for any taxable year is reduced (but not below zero) by 15 percent of the tentative LICTI for such taxable year as it exceeds $3,000 and is ultimately phased out at $15,000. The change in deferred tax asset valuation allowance was primarily due to the unanticipated utilization of certain capital loss carryforward benefits that had been previously reserved. Deferred tax liabilities and assets at December 31, 2011 and 2010 were comprised of the following:
|  |  |  | Restated |
|  | 2011 |  | 2010 |
Deferred tax liabilities: |  |  |  |  |  |  |
Deferred acquisition costs |  | $ | (4,255 | ) | $ | (3,501 | )
Deferred and uncollected premiums |  |  | (736 | ) |  | (738 | )
Net unrealized investment gains |  |  | (6,900 | ) |  | (219 | )
Other |  |  | (18 | ) |  | (15 | )
Total deferred tax liabilities |  |  | (11,909 | ) |  | (4,473 | )
Deferred tax assets: |  |  |  |  |  |  |
Net operating loss carryforwards |  |  | 1,429 |  |  | 1,779 |
Insurance reserves |  |  | 4,341 |  |  | 3,591 |
Capital loss carryforwards |  |  | 5,675 |  |  | 6,068 |
Impaired assets |  |  | 1,443 |  |  | 1,060 |
Alternative minimum tax credit |  |  | 510 |  |  | 386 |
Bad debts and other |  |  | 903 |  |  | 937 |
Total deferred tax assets |  |  | 14,301 |  |  | 13,821 |
Asset valuation allowance |  |  | (5,708 | ) |  | (6,120 | )
Net deferred tax (liabilities) assets |  | $ | (3,316 | ) | $ | 3,228 |
The components of income tax expense (benefit) were:
|  |  |  |  | Restated |
|  | 2011 |  |  | 2010 |
Current - Federal |  | $ | 399 |  |  | $ | (597 | )
Deferred - Federal |  |  | 38 |  |  |  | 320 |
Change in deferred tax asset valuation allowance |  |  | (412 | ) |  |  | (92 | )
Total |  | $ | 25 |  |  | $ | (369 | )
At December 31, 2011, the Company had regular federal net operating loss carryforwards (“NOLs”) of approximately $4,082 expiring generally between 2025 and 2029. Currently, the Company believes that deferred income tax benefits relating to the NOLs will be realized. However, realization of the NOLs will be assessed periodically based on the Company's current and anticipated results of operations, and amounts could increase or decrease in the near term if estimates of future taxable income change. As of December 31, 2011 and 2010, a valuation allowance of $5,708 and $6,120, respectively, was established against deferred income tax benefits relating primarily to capital loss carryforwards that may not be realized. The Company does not currently anticipate having sufficient future capital gains to offset certain of these capital losses during the applicable carryforward period. However, the Company continues to periodically assess the potential realization of these and all other deferred tax benefits. During 2011, the Company's valuation allowance decreased by $412. The decrease was primarily due to the unanticipated utilization of certain capital loss carryforward benefits that had been previously reduced to zero through an existing valuation allowance reserve. The Company has formal tax-sharing agreements, and files a consolidated income tax return, with its subsidiaries.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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