Scm Community Transportation Corporation

Schedule D, Page 3, Part X

“Fasb issued asc 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, 2017, the organization had no material unrecognized tax benefits and no adjustments to liabilities or operations were required under asc 740. The organization'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, 2017. Generally, the organization's three preceding tax years are subject to examination by federal and state taxing authorities. There are no income tax examinations currently in process. The organization evaluates its uncertain tax positions using the provisions of asc 450, "contingencies." accordingly, a loss contingency is recognized when it is probable that a liability has been incurred as of the date of the financial statements and the amount of the loss can be reasonably estimated. The amount recognized is subject to estimate and management judgment with respect to the likely outcome of each uncertain tax position. The amount that is ultimately sustained for an individual uncertain tax position or for all uncertain tax position in the aggregate could differ from the amount recognized.”