Note 6. Income Tax Matters
Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2016 and 2015 are as follows:
| Year Ended December 31, | ||||||||
| 2016 | 2015 | |||||||
| Deferred tax assets: | ||||||||
| Loss carryforwards | $ | 9,705,974 | $ | 8,962,587 | ||||
| Capitalized costs | 667,264 | 667,264 | ||||||
| Unrealized losses on investments | 436,949 | 356,495 | ||||||
| Benefit reserves | 984,640 | 1,071,997 | ||||||
| Total deferred tax assets | 11,794,827 | 11,058,343 | ||||||
| Less valuation allowance | (10,170,638 | ) | (9,287,024 | ) | ||||
| Total deferred tax assets, net of valuation allowance | 1,624,189 | 1,771,319 | ||||||
| Deferred tax liabilities: | ||||||||
| Policy acquisition costs | 571,148 | 593,654 | ||||||
| Due premiums | 228,136 | 234,468 | ||||||
| Value of business acquired | 586,905 | 693,297 | ||||||
| Intangible assets | 238,000 | 238,000 | ||||||
| Property and equipment | - | 11,900 | ||||||
| Total deferred tax liabilities | 1,624,189 | 1,771,319 | ||||||
| Net deferred tax assets | $ | - | $ | - | ||||
At December 31, 2016 and 2015, the Company recorded a valuation allowance of 10,170,638 and $9,287,024, respectively, on the deferred tax assets to reduce the total to an amount that management believes will ultimately be realized. Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry forwards are expected to be available to reduce taxable income.
Loss carry forwards for tax purposes as of December 31, 2016, have expiration dates that range from 2024 through 2036.
There was no income tax expense for the years ended December 31, 2016 and 2015. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 34% to pretax income, as a result of the following:
| Year Ended December 31, | ||||||||
| 2016 | 2015 | |||||||
| Computed expected income tax benefit | $ | (1,308,293 | ) | $ | (856,129 | ) | ||
| Increase (reduction) in income taxes resulting from: | ||||||||
| Bargain purchase gain | (451,019 | ) | (307,557 | ) | ||||
| Meals, entertainment and political contributions | 18,956 | 46,315 | ||||||
| Goodwill impairment | 384,140 | - | ||||||
| Other (Benefit reserves and NOL true-up/merger of First Wyoming 2015) | (53,722 | ) | 178,519 | |||||
| (101,645 | ) | (82,767 | ) | |||||
| Tax benefit before valuation allowance | (1,409,938 | ) | (938,896 | ) | ||||
| Change in valuation allowance | 1,409,938 | 938,896 | ||||||
| Net income tax expenses | $ | - | $ | - | ||||