COMMUNITY BANCORP /VT Income Taxes Disclosure
Note 14. Income Taxes
The Company prepares its income tax return on a consolidated basis. Income taxes are allocated to members of the consolidated group based on taxable income.
The components of income tax expense for the years ended December 31 were as follows:
|
| 2025 |
|
| 2024 |
| ||
|
|
|
|
|
|
| ||
Currently paid or payable |
| $ | 3,388,125 |
|
| $ | 2,086,702 |
|
Deferred expense |
|
| 48,470 |
|
|
| 351,928 |
|
Total income tax expense |
| $ | 3,436,595 |
|
| $ | 2,438,630 |
|
Total income tax expense differed from the amounts computed at the statutory federal income tax rate of 21% for both periods presented primarily due to the following for the years ended December 31:
|
| 2025 |
|
| 2024 |
| ||||||||||
|
| Dollars |
|
| Percentage |
|
| Dollars |
|
| Percentage |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Computed expense at statutory rates |
| $ | 4,284,962 |
|
|
| 21.00 | % |
| $ | 3,192,647 |
|
|
| 21.00 | % |
State and local income taxes, net of federal benefit |
|
| 17,000 |
|
|
| 0.08 | % |
|
| 16,000 |
|
|
| 0.11 | % |
Tax exempt interest and BOLI |
|
| (655,320 | ) |
|
| -3.21 | % |
|
| (578,350 | ) |
|
| -3.80 | % |
BOLI |
|
| (16,743 | ) |
|
| -0.08 | % |
|
| (17,987 | ) |
|
| -0.12 | % |
Disallowed interest |
|
| 80,200 |
|
|
| 0.39 | % |
|
| 80,946 |
|
|
| 0.53 | % |
Tax credits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low Income Housing |
|
| (611,090 | ) |
|
| -2.99 | % |
|
| (611,090 | ) |
|
| -4.02 | % |
Rehab |
|
| (87,360 | ) |
|
| -0.43 | % |
|
| (87,360 | ) |
|
| -0.57 | % |
New Markets |
|
| (300,000 | ) |
|
| -1.47 | % |
|
| (300,000 | ) |
|
| -1.97 | % |
Low-income housing investment amortization expense |
|
| 748,743 |
|
|
| 3.67 | % |
|
| 650,940 |
|
|
| 4.28 | % |
Other |
|
| (23,797 | ) |
|
| -0.12 | % |
|
| 92,884 |
|
|
| 0.61 | % |
Total income tax expense |
| $ | 3,436,595 |
|
|
| 16.84 | % |
| $ | 2,438,630 |
|
|
| 16.04 | % |
Income taxes paid were as follows for the years ended December 31:
|
| 2025 |
|
| 2024 |
| ||
|
|
|
|
|
|
| ||
Federal |
| $ | 2,490,000 |
|
| $ | 1,305,000 |
|
New Hampshire |
|
| 17,000 |
|
|
| 16,000 |
|
Vermont |
|
| 2,100 |
|
|
| 0 |
|
Total |
| $ | 2,509,100 |
|
| $ | 1,321,000 |
|
The deferred income tax expense (benefit) consisted of the following items for the years ended December 31:
|
| 2025 |
|
| 2024 |
| ||
|
|
|
|
|
|
| ||
Depreciation |
| $ | 15,697 |
|
| $ | 75,625 |
|
Mortgage servicing rights |
|
| (16,309 | ) |
|
| (17,330 | ) |
Deferred compensation |
|
| 0 |
|
|
| 2,310 |
|
Bad debts |
|
| (221,502 | ) |
|
| 6,827 |
|
Limited partnership amortization |
|
| 101,054 |
|
|
| 75,454 |
|
Investment in CFS Partners |
|
| 93,667 |
|
|
| 45,299 |
|
Deferred SBA PPP fees |
|
| 1,481 |
|
|
| 1,492 |
|
Prepaid expenses |
|
| 68,539 |
|
|
| (1,606 | ) |
Deferred origination costs |
|
| 24,224 |
|
|
| 167,448 |
|
Other |
|
| (18,381 | ) |
|
| (3,591 | ) |
Change in deferred tax benefit |
| $ | 48,470 |
|
| $ | 351,928 |
|
|
|
|
|
|
|
|
|
|
Securities valuation (OCI) |
|
| 1,638,980 |
|
|
| 41,142 |
|
Total change in deferred taxes |
| $ | 1,687,450 |
|
| $ | 393,070 |
|
Listed below are the significant components of the net deferred tax asset as of December 31:
|
| 2025 |
|
| 2024 |
| ||
|
|
|
|
|
|
| ||
Components of the deferred tax asset: |
|
|
|
|
|
| ||
Bad debts |
| $ | 2,281,647 |
|
| $ | 2,060,145 |
|
Deferred compensation |
|
| 4,620 |
|
|
| 4,620 |
|
Investment in CFS Partners |
|
| 8,506 |
|
|
| 52,978 |
|
Contingent liability - MPF program |
|
| 17,173 |
|
|
| 17,838 |
|
Finance lease |
|
| 132,088 |
|
|
| 103,827 |
|
Operating lease |
|
| 1,175 |
|
|
| 0 |
|
Deferred SBA PPP fees |
|
| 232 |
|
|
| 1,713 |
|
Unrealized loss on debt securities AFS |
|
| 2,554,859 |
|
|
| 4,193,839 |
|
Other |
|
| 132,311 |
|
|
| 147,835 |
|
Total deferred tax asset |
| $ | 5,132,611 |
|
| $ | 6,582,795 |
|
|
|
|
|
|
|
|
|
|
Components of the deferred tax liability: |
|
|
|
|
|
|
|
|
Depreciation |
| $ | 558,539 |
|
| $ | 542,842 |
|
Limited partnerships |
|
| 510,086 |
|
|
| 409,032 |
|
Mortgage servicing rights |
|
| 131,633 |
|
|
| 147,942 |
|
Investment in CFS Partners |
|
| 49,195 |
|
|
| 0 |
|
Operating lease |
|
| 0 |
|
|
| 5,134 |
|
Prepaid expenses |
|
| 193,478 |
|
|
| 124,939 |
|
Deferred origination costs |
|
| 191,672 |
|
|
| 167,448 |
|
Total deferred tax liability |
|
| 1,634,603 |
|
|
| 1,397,337 |
|
Net deferred tax asset |
| $ | 3,498,008 |
|
| $ | 5,185,458 |
|
U.S. GAAP provides for the recognition and measurement of deductible temporary differences (including general valuation allowances) to the extent that it is more likely than not that the deferred tax asset will be realized.
The net deferred tax asset is included in Other assets in the consolidated balance sheets.
ASC Topic 740, Income Taxes, defines the criteria that an individual tax position must satisfy some or all the benefits of that position to be recognized in a company's financial statements. Topic 740 prescribes a recognition threshold of more-likely-than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, for those tax positions to be recognized in the consolidated financial statements. The Company has adopted these provisions and there was no material effect on the consolidated financial statements. The Company is currently open to audit under the statute of limitations by the IRS for the years ended December 31, 2022 through 2024. The 2025 tax return has not yet been filed.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
| 2023 | Mar 29, 2024 | |
| 2022 | Mar 27, 2023 | |
| 2021 | Mar 24, 2022 | |
| 2020 | Mar 26, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 15, 2019 | |
| 2017 | Mar 15, 2018 | |
| 2016 | Mar 20, 2017 | |
| 2015 | Mar 25, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.