14. Income Taxes
The components of our provision for income tax expense were as follows:
| Year Ended December 31, | ||||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Current | $ | 8,461 | $ | 1,564 | $ | 7,910 | ||||||
| Deferred | (2,067 | ) | (85 | ) | 378 | |||||||
| Total provision | $ | 6,394 | $ | 1,479 | $ | 8,288 | ||||||
The provision for income taxes differs from the amount that would be computed by applying the statutory federal rate to income before provision for income taxes as a result of the following:
| Year Ended December 31, | ||||||||||||
| 2017 | 2016 | 2015 | ||||||||||
| Income before income taxes | $ | 22,006 | $ | 6,117 | $ | 25,873 | ||||||
| Expected provision for federal income taxes | $ | 7,702 | $ | 2,141 | $ | 9,067 | ||||||
| Permanent differences | (736 | ) | (670 | ) | (111 | ) | ||||||
| Change in valuation allowance | (394 | ) | (62 | ) | ||||||||
| Stock conversion and IPO expenses | 568 | — | — | |||||||||
| Impact of effective tax rate change on deferred income tax assets and liabilities | (1,274 | ) | — | — | ||||||||
| Other | 528 | 70 | (668 | ) | ||||||||
| Total provision | $ | 6,394 | $ | 1,479 | $ | 8,288 | ||||||
Income tax expense for the year ended December 31, 2017 includes a reduction of $1,274 to current income tax expense due to a new corporate income tax rate for tax year 2018 and beyond, enacted on December 22, 2017. Accounting guidance requires that companies re-measure existing deferred income tax assets (including loss carryforwards) and liabilities when a change in tax rate occurs and record an offset for the net amount of the change as a component of income tax expense from continuing operations in the period of enactment. The guidance also requires any change to a previously recorded valuation allowance as a result of re-measuring existing temporary differences and loss carryforwards to be reflected as a component of income tax expense from continuing operations. The valuation allowance against certain deferred income tax assets decreased by $394 to $628 at December 31, 2017 from $1,022 at December 31, 2016.
The income tax effects of temporary differences that give rise to significant portions of our deferred income tax assets and deferred income tax liabilities, valued at the new effective tax rate of 21% at December 31, 2017, are as follows:
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| Deferred income tax assets: | ||||||||
| Unearned premium | $ | 2,657 | $ | 4,023 | ||||
| Unpaid losses and loss adjustment expenses | 251 | 563 | ||||||
| Carryovers | 1,040 | 1,810 | ||||||
| Other | 331 | 252 | ||||||
| Total deferred income tax assets | 4,279 | 6,648 | ||||||
| Deferred income tax liabilities: | ||||||||
| Deferred policy acquisition costs | 1,860 | 3,129 | ||||||
| Net unrealized gains | 4,266 | 5,407 | ||||||
| Other | 64 | 5 | ||||||
| Total deferred income tax liabilities | 6,190 | 8,541 | ||||||
| Net deferred income tax liability | (1,911 | ) | (1,893 | ) | ||||
| Valuation allowance | (628 | ) | (1,022 | ) | ||||
| Deferred income tax liability, net | $ | (2,539 | ) | $ | (2,915 | ) | ||
At December 31, 2017 and 2016, we had no unrecognized tax benefits, no accrued interest and penalties, and no significant uncertain tax positions. No interest and penalties were recognized during the years ended December 31, 2017, 2016, or 2015.
At December 31, 2017 and 2016, the Company, other than Battle Creek, had no income tax related carryovers for net operating losses, alternative minimum tax credits, or capital losses. Battle Creek, which files its income tax returns on a stand-alone basis, had net operating loss carryovers of $4,951 and $5,159 at December 31, 2017 and 2016, respectively. The net operating loss carryforward expires beginning in 2021 through 2030. In 2016, a $247 capital loss carryover expired and none of the capital loss carryover was utilized against realized capital gains.