b'principal payments of $66,666 beginning June 2018, with a final payment of $66,676 due June 2032. These payments are deposited into another savings account, Morgan County Board of Education Sinking Fund and will accumulate until 2032 at which time the $1,000,000 will be repaid to the Bank in full.In lieu of cash interest payments, the Bank may receive a tax credit annually for 15 years approximately equal to 4.16% of the outstanding principal amount.For 2018 and 2017, the Bank opted to use the tax credit.NOTE 7.PREMISES AND EQUIPMENTMajor classifications of premises and equipment at December 31 were as follows: 2018 2017Land and land improvements $ 2,091,298 $ 2,081,711Buildings and building improvements5,637,1795,102,523Bank owned automobiles 114,537 79,764Furniture, fixtures and equipment4,294,5614,131,397$ 12,137,575 $ 11,395,395 Less accumulated depreciation6,546,5246,125,026$ 5,591,051 $ 5,270,369 Depreciation expense amounted to $440,858 and $434,637 in 2018 and 2017, respectively.Computer software, net of accumulated amortization, included in the statement of financial condition caption Other Assets amounted to $221,673 and $101,490 at December 31, 2018 and 2017, respectively.Amortization expense on computer software amounted to $86,883 and $63,957 in 2018 and 2017, respectively. NOTE 8.FORECLOSED REAL ESTATE HELD FOR SALEDuring 2018, the Bank foreclosed on four loans secured by residential real estate.During 2018, five foreclosed properties were sold at a net gain of $9,370 which is included in noninterest income on the statement of income.Included in this gain is a write-up on a property in the amount of $12,543.The carrying value of the five real estate properties held at December 31, 2018 totaled $191,070.The cumulative charge to earnings related to these properties, which consisted of loan charge offs, OREO write-downs and non-capitalized expenses incurred to prepare the properties for resale, totaled $109,229, of which $59,493 were incurred in 2018.At December 31, 2018, there was one loan secured by residential real estate in the process of foreclosure totaling $61,600.During 2017, the Bank foreclosed on two loans secured by land.During 2017, five lots from a foreclosed property were sold at a net loss of $22,052 which is included in noninterest income on the statement of income.The carrying value of the properties held at December 31, 2017 totaled $77,941.The cumulative charge to earnings related to these properties, which consisted of loan charge offs, OREO write-downs and non-capitalized expenses incurred to prepare the properties for resale, totaled $72,602, of which $19,738 were incurred in 2017.During 2017, the Bank foreclosed on three loans secured by residential real estate.During 2017, four foreclosed properties were sold at a net gain of $20,532 which is included in noninterest income on the statement of income.The carrying value of real estate properties held at December 31, 2017 totaled $57,600. The cumulative charge to earnings related to these properties, which consisted of loan charge offs, OREO write-downs and non-capitalized expenses incurred to prepare the properties for resale, totaled $54,681 of which $37,952 were incurred in 2017.At December 31, 2017, there were two loans secured by residential real estate in the process of foreclosure totaling $210,987. 30'