Note 13 - Federal Income Taxes 

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) became law. A description of the Tax Act and the effect to the Company is located in Note 1, “Income Taxes”, on page 55 of this report, and incorporated here by reference.



The components of income tax expense are as follows:



A reconciliation of the statutory federal income tax at a rate of 34% to the income tax expense included in the statement of income is as follows:





The Company follows guidance in ASC Topic 740 regarding accounting for uncertainty in income taxes. The Company has evaluated its tax positions. A tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that has a likelihood of being realized on examination of more than 50 percent. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Under the “more likely than not” threshold guidelines, the Company believes no significant uncertain tax positions exist, either individually or in the aggregate, that would give rise to the non-recognition of an existing tax benefit. As of December 31, 2017 and 2016,  the Company had no material unrecognized tax benefits or accrued interest and penalties. The Company’s policy is to account for interest as a component of interest expense and penalties as a component of other expense. The Company is subject to U.S. federal income tax.



The components of the net deferred tax asset are as follows:





Based upon the level of historical taxable income and projections for future taxable income over periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences.