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Income Taxes | 12 Months Ended
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Dec. 31, 2022
Income Taxes [Abstract] |
Income Taxes |
Note 8. | Income Taxes
Total income taxes were allocated as follows:
|  | 2022 |  |  | 2021 |
Total tax expense on income |  | $ | 571 |  |  | $ | 1,021 |
Tax benefit on components of shareholders’ equity: |  |  |  |  |  |  |  |
Net unrealized losses on investment securities |  |  | (10,589 | ) |  |  | (1,944 | )
Total tax benefit |  | $ | (10,018 | ) |  | $ | (923 | )
A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and the income tax benefit is as follows:
|  | 2022 |  |  | 2021 |
Federal income tax provision at the statutory rate |  | $ | 440 |  |  | $ | 1,112 |
Statutory rate |  |  | 21 | % |  |  | 21 | %
Dividends-received deduction |  |  | (24 | ) |  |  | (26 | )
Meals and entertainment |  |  | 61 |  |  |  | 32 |
Vested stock and club dues |  |  | 14 |  |  |  | (28 | )
Parking disallowance |  |  | 17 |  |  |  | 16 |
Penalties and fines |  |  | 149 |  |  |  | — |
Adjustment for prior years’ estimates to actual |  |  | (86 | ) |  |  | (85 | )
Income tax expense |  | $ | 571 |  |  | $ | 1,021 |
Effective tax rate |  |  | 27.2 | % |  |  | 19.3 | %
The primary difference between the effective tax rate and the federal statutory income tax rate for 2022 resulted from a permanent difference related to penalties and fines incurred of $149. Also contributing to differences between the effective tax rate and the federal statutory income tax rate were 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 $86 in the year ended December 31, 2022. Other contributing factors to the differences between the effective tax rate and the federal statutory income tax rate were permanent differences related to meals and entertainment and 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 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 DRD. Deferred tax assets and liabilities at December 31, 2022 and 2021 were comprised of the following:
|  | 2022 |  |  | 2021 |
Deferred tax assets: |  |  |  |  |  |
Deferred acquisition costs |  | $ | 7,953 |  |  | $ | 7,026 |
Net unrealized investment losses |  |  | 4,489 |  |  |  | — |
Insurance reserves |  |  | 1,597 |  |  |  | 2,028 |
Impaired assets |  |  | 791 |  |  |  | 780 |
Bad debts and other |  |  | 252 |  |  |  | 280 |
Total deferred tax assets |  |  | 15,082 |  |  |  | 10,114 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Deferred and uncollected premiums |  | $ | (835 | ) |  | $ | (561 | )
Net unrealized investment gains |  |  | — |  |  |  | (7,689 | )
Other |  |  | (84 | ) |  |  | (109 | )
Total deferred tax liabilities |  |  | (919 | ) |  |  | (8,359 | )
Net deferred tax asset (liability) |  | $ | 14,163 |  |  | $ | 1,755 |
The components of income tax expense were:
|  | 2022 |  |  | 2021 |
Current – Federal |  | $ | 2,390 |  |  | $ | 2,133 |
Deferred – Federal |  |  | (1,819 | ) |  |  | (1,112 | )
Total |  | $ | 571 |  |  | $ | 1,021 |
The Company has formal tax-sharing agreements, and files a consolidated income tax return, with its subsidiaries. Tax years 2019, 2020 and 2021 are considered open tax years that remain subject to examination by the Internal Revenue Service.

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