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Income Taxes | 12 Months Ended
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Dec. 31, 2021
Income Taxes [Abstract] |
Income Taxes |
Note 7. | Income Taxes
Total income taxes were allocated as follows:
|  | 2021 |  |  | 2020 |
Total tax expense on income |  | $ | 1,021 |  |  | $ | 3,334 |
Tax expense on components of shareholders’ equity: |  |  |  |  |  |  |  |
Net unrealized gains (losses) on investment securities |  |  | (1,944 | ) |  |  | 3,865 |
Total tax expense (benefit) |  | $ | (923 | ) |  | $ | 7,199 |
A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and the income tax benefit is as follows:
|  | 2021 |  |  | 2020 |
Federal income tax provision |  | $ | 1,112 |  |  | $ | 3,256 |
Statutory rate |  |  | 21 | % |  |  | 21 | %
Dividends-received deduction |  |  | (26 | ) |  |  | (12 | )
Meals and entertainment |  |  | 32 |  |  |  | 20 |
Vested stock and club dues |  |  | (28 | ) |  |  | 36 |
Parking disallowance |  |  | 16 |  |  |  | 16 |
Adjustment for prior years’ estimates to actual |  |  | (85 | ) |  |  | 18 |
Income tax expense |  | $ | 1,021 |  |  | $ | 3,334 |
Effective tax rate |  |  | 19.3 | % |  |  | 21.5 | %
The primary differences between the effective tax rate and the federal statutory income tax rate for 2021 resulted from the adjustment for prior years’ estimates to actual that are generally updated at the completion of the third quarter of each fiscal year and were $85 in the year ended December 31, 2021. Also contributing to differences between the effective tax rate and the federal statutory income tax rate were permanent differences related to meals and entertainment and vested stock and club dues. Another contributing factor was the dividends-received deduction (“DRD”). The current estimated DRD is adjusted as underlying factors change and can vary from estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income. The primary differences between the effective tax rate and the federal statutory income tax rate for 2020 resulted from permanent differences related to meals and entertainment and vested stock and club dues. Also contributing to differences between the effective tax rate and the federal statutory income tax rate were adjustment for prior years’ estimates to actual that are generally updated at the completion of the third quarter of each fiscal year and were $18 in the year ended December 31, 2020. Deferred tax assets and liabilities at December 31, 2021 and 2020 were comprised of the following:
|  | 2021 |  |  | 2020 |
Deferred tax assets: |  |  |  |  |  |
Deferred acquisition costs |  | $ | 7,026 |  |  | $ | 4,666 |
Insurance reserves |  |  | 2,028 |  |  |  | 2,682 |
Impaired assets |  |  | 780 |  |  |  | 822 |
Bad debts and other |  |  | 280 |  |  |  | 326 |
Total deferred tax assets |  |  | 10,114 |  |  |  | 8,496 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Deferred and uncollected premiums |  | $ | (561 | ) |  | $ | (409 | )
Net unrealized investment gains |  |  | (7,689 | ) |  |  | (9,235 | )
Other |  |  | (109 | ) |  |  | (153 | )
Total deferred tax liabilities |  |  | (8,359 | ) |  |  | (9,797 | )
Net deferred tax asset (liability) |  | $ | 1,755 |  |  | $ | (1,301) |
The components of income tax expense were:
|  | 2021 |  |  | 2020 |
Current – Federal |  | $ | 2,133 |  |  | $ | 5,584 |
Deferred – Federal |  |  | (1,112 | ) |  |  | (2,250 | )
Total |  | $ | 1,021 |  |  | $ | 3,334 |
The Company has formal tax-sharing agreements, and files a consolidated income tax return, with its subsidiaries. Tax years 2018, 2019 and 2020 are considered open tax years that remain subject to examination by the Internal Revenue Service.

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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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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