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## CITIZENS, INC. 

The components of deferred federal income taxes are as follows: 

## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(Continued) 

<img src='content_image/1046427.jpg'>

A summary of the changes in the components of deferred federal and state income taxes is as follows: 

<img src='content_image/1046426.jpg'>

The Company and our subsidiaries have net operating loss carryforwards of $6.6 million at December 31, 2020 which will begin expiring in 2036. MGLIC joined the Company's consolidated tax return filing group in 2020 and had a $1.1 million net operating loss carryforward at January 1, 2020, which will begin expiring in 2036. The MGLIC net operating losses were incurred while it was owned by the Company; thus, there will be no IRC Section 382 limit on the utilization of these net operating losses. 

The Company and our subsidiaries had no capital loss carryforwards at December 31, 2020. 

At December 31, 2020 and 2019, we determined that as a result of our taxable capital gain income in carryback periods, the expected reversal of existing deferred tax liabilities, and tax planning strategies, it was more likely than not that the deferred tax assets would be realized. Thus, the Company holds no valuation allowance in operations or other comprehensive income at December 31, 2020 and 2019. 

