Winchester Cooperative Nursery School Inc.

Part X, Line 2:

“The School is exempt from income taxes under Section 501(c) (3) of the Internal Revenue Code (the "Code") and is not a private foundation. Section 501(c) (3) of the Code provides for the exemption of organizations that are organized and operated exclusively for religious charitable, scientific, literacy or educational purposes and whose net earnings do not benefit any private shareholder or individual. Contributions to the School are tax deductible. The School is required to file an annual information return with the Internal Revnue Service and the Commonwealth of Massachusetts. The School has either filed or extended the time to file the annual information returns and has not been notified by any federal or state taxing authorities of any matters that would jeopardize the School's tax-exempt status. Accordingly, no income tax expense has been recorded in the financial statements. The Financial Accounting Standards Board (FASB) issued ASC Topic 740, "Income taxes" (ASC 740). ASC 740 clarifies the accounting for income taxes by prescribing a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is defined in ASC 740 as a tax position that is more likely than not to be sustained upon examination by the applicable tax authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit to be recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. The uncertain tax position standard must be applied to all existing tax positions upon initial adoption. As of June 30, 2019, the School had no material unrecognized tax benefits and no adjustments to liabilities or operations were required under ASC 740. The School's practice was and continues to be to recognize interest and penalty expenses related to uncertain tax positions in income tax expense, which were zero for the year ended June 30, 2019. Generally, the School's three preceding tax years are subject to examination by federal and state taxing authorities. There are no income tax examinations currently in process.”