v3.25.2
Income Taxes (Tables)
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Schedule of Deferrred Tax Assets and Liabilities
Significant components of the Company’s deferred tax assets and liabilities are as follows:
 June 30,
2025		December 31,
2024
   
Deferred tax asset:  
Net operating loss carryovers (1)$— $419,357 
Claims reserve discount1,404,961 1,305,466 
Unearned premium4,890,007 3,810,973 
Deferred ceding commission revenue1,469,086 2,423,660 
Net unrealized losses on securities2,263,093 3,069,900 
Other1,015,367 834,921 
Total deferred tax assets11,042,514 11,864,277 
   
Deferred tax liability:  
Investment in KICO (2)759,543 759,543 
Deferred policy acquisition costs5,008,086 5,193,798 
Intangible assets105,000 105,000 
Depreciation and amortization62,241 208,016 
Total deferred tax liabilities5,934,870 6,266,357 
   
Net deferred income tax asset$5,107,644 $5,597,920 
(1)The deferred tax assets from net operating loss carryovers (“NOL”) are as follows:
Type of NOL June 30,
2025		December 31,
2024		Expiration
 Federal only, NOL from 2024 and 2023
$— $419,357 None
State only (A) 3,243,094 3,075,395 December 2027 - December 2045
Valuation allowance (3,243,094)(3,075,395)
State only, net of valuation allowance - - 
Total deferred tax asset from net operating loss carryovers $— $419,357 
(A)Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of June 30, 2025 and December 31, 2024 was $49,893,758 and $47,313,775, respectively. KICO, the Company’s insurance underwriting subsidiary, is not subject to state income taxes. KICO’s state tax obligations are paid through a gross premiums tax, which is included in the condensed consolidated statements of income and comprehensive income within other underwriting expenses. Kingstone has recorded a full valuation allowance due to the uncertainty of generating enough state taxable income to utilize 100% of the available state NOLs over their remaining lives, which expire between 2027 and 2045.
(2)Deferred tax liability – Investment in KICO
On July 1, 2009, the Company completed the acquisition of 100% of the issued and outstanding common stock of KICO (formerly known as Commercial Mutual Insurance Company (“CMIC”)) pursuant to the conversion of CMIC from an advance premium cooperative to a stock property and casualty insurance company. Pursuant to the plan of conversion, the Company acquired a 100% equity interest in KICO, in consideration for the exchange of $3,750,000 principal amount of surplus notes of CMIC. In addition, the Company forgave all accrued and unpaid interest on the surplus notes as of the date of conversion. As of the date of acquisition, unpaid accrued interest on the surplus notes along with the accretion of the discount on the original purchase of the surplus notes totaled $2,921,319 (together “Untaxed Interest”). As of the date of acquisition, the deferred tax liability on the Untaxed Interest was $1,169,000. A temporary difference with an indefinite life exists when the parent has a lower carrying value of its subsidiary for income tax purposes. The deferred tax liability was reduced to $759,543 upon the reduction of federal income tax rates as of December 31, 2017. The Company is required to maintain its deferred tax liability of $759,543 related to this temporary difference until the stock of KICO is sold, or the assets of KICO are sold or KICO and the parent are merged.
Schedule of Net Operating Loss Carryovers The deferred tax assets from net operating loss carryovers (“NOL”) are as follows:
Type of NOL June 30,
2025		December 31,
2024		Expiration
 Federal only, NOL from 2024 and 2023
$— $419,357 None
State only (A) 3,243,094 3,075,395 December 2027 - December 2045
Valuation allowance (3,243,094)(3,075,395)
State only, net of valuation allowance - - 
Total deferred tax asset from net operating loss carryovers $— $419,357 
(A)Kingstone generates operating losses for state purposes and has prior year NOLs available. The state NOL as of June 30, 2025 and December 31, 2024 was $49,893,758 and $47,313,775, respectively. KICO, the Company’s insurance underwriting subsidiary, is not subject to state income taxes. KICO’s state tax obligations are paid through a gross premiums tax, which is included in the condensed consolidated statements of income and comprehensive income within other underwriting expenses. Kingstone has recorded a full valuation allowance due to the uncertainty of generating enough state taxable income to utilize 100% of the available state NOLs over their remaining lives, which expire between 2027 and 2045.