Providence Performing Arts Center

“The organization has established the board-designated fund as a perpetual endowment to provide annual drawdowns from total return to supplement the organization operating budget when needed, as well as capital for extraordinary uses from time to time. The board has adopted investment objectives and spending policies to ensure a total return of capital necessary to preserve and enhance the principal of the funds and at the same time provide a dependable source of income for current operations and prgrams, if necessary.”

“Ppac qualifies as a tax-exempt organization under section 501(c)(3) of the internal revenue code. As a not-for-profit entity, ppac is subject to unrelated business income tax (ubit),if applicable. In accordance with fasb asc 740, income taxes, ppac applies the "more likely than not" threshold to the recognition and derecognition of tax positions for its consolidated financial statements. Management has evaluated ppac's tax positions and has concluded that there were no uncertain tax positions that qualified for either recognition or disclosure in these consolidated financial statements. Pfm is organized as a for-profit taxable entity. Impact, pfo and pfm, llc, limited liability companies, file a consolidated income tax return with pfm. Deferred income taxes are provided using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities, and their tax bases. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. When tax returns are filed, it is highly certain that some positions taken will be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that will be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions that meet the more-likely-than-not threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above, if any, is reflected as a liability for unrecognized tax benefits in the accompanying consolidated statements of financial position, along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Management has evaluated pfm's tax positions and has concluded that there were no uncertain tax positions that qualified for either recognition or disclosure in these consolidated financial statements. Interest and penalties associated with unrecognized tax benefits, if any, are classified in the provision for income taxes.”