Note 9. Income Taxes

The components of income tax expense for the years ended December 31, 2015, 2014, and 2013 are as follows:

	2015			2014			2013
Current:
Federal	$	(322,723	)	$	408,056		$	400,931
State		(60,104	)		187,266			197,671

Total current		(382,827	)		595,322			598,602
Deferred income (benefits) taxes:
Federal		352,543			(253,848	)		(9,542	)
State		275,205			(32,822	)		44,795

Total deferred (benefits) taxes		627,748			(286,670	)		35,252

Income tax expense	$	244,921		$	308,652		$	633,855

A reconciliation of income tax expense computed at the statutory rate of 34% to the actual income tax expense for the years ended December 31, 2015, 2014, and 2013 is as follows:

	2015			2014			2013

Income before income tax expense (benefit)	$	1,597,537		$	2,223,178		$	3,248,032

Taxes computed at Federal income tax rate	$	543,163		$	755,881		$	1,104,331
Increase (decrease) resulting from:
Tax-exempt income		(441,890	)		(531,764	)		(630,710	)
State income taxes, net of Federal income tax benefit		141,966			101,933			160,027
Other		1,682			(17,398	)		207

Income tax expense	$	244,921		$	308,652		$	633,855

The components of the net deferred income tax benefits as of December 31, 2015, 2014, and 2013 are as follows:

	2015		2014		2013

Deferred income tax benefits:
Accrued deferred compensation	$	153,256	$	142,308	$	129,101
Impairment loss on investment securities		-		1,305,584		1,218,497
Allowance for credit losses		362,732		364,697		458,303
Nonaccrual interest		445,173		445,173		339,765
Alternative minimum tax credits		929,264		615,186		485,444
Net operating loss carryforward credits		373,986		-		-
Accumulated depreciation		61,019		72,354		60,627
Other real estate owned		14,940		14,940		14,940
Reserve for unfunded commitments		4,641		78,890		78,890
Other temporary differences		2,116		2,116		1,332
Accumulated securities premium accretion		138,207		71,834		39,514
Net unrealized depreciation on investment securities available for sale		199,277		-		778,048
Total deferred income tax benefits		2,684,611		3,113,082		3,604,461

Deferred income tax liabilities:
Accumulated securities discount accretion		-		-		-
Net unrealized appreciation on investment securities available for sale		-		67,847		-
Total deferred income tax liabilities		-		67,847		-

Net deferred income tax benefits	$	2,684,611	$	3,045,235	$	3,604,461

Management has determined that no valuation allowance is required as it believes it is more likely than not that all of the deferred tax assets will be fully realizable in the future. At December 31, 2015, 2014, and 2013, management believes there are no uncertain tax positions under ASC Topic 740 Income Taxes (formerly FIN 48, Accounting for Uncertainty in Income Taxes).

The Company’s federal income tax returns for 2014, 2013, and 2012 are subject to examinations by the IRS generally for three years after they were filed. In addition, the Company’s state tax returns for the same years are subject to examination by state tax authorities for similar time periods. The 2015 income tax return will be filed in 2016.