Otr Holdings Inc

PART X, LINE 2:

“Uncertain tax positions 3cdc and otr, a wholly owned subsidiary, are exempt from federal income tax under the applicable internal revenue code (the code) section, though it is subject to tax on income unrelated to its exempt purpose, unless that income is otherwise excluded by the code. 3cdc and otr are, likewise, exempt from ohio income tax under comparable state statutes. 3cdc derives revenues from an unrelated trade or business and files a federal form 990-t and a cincinnati business tax return to pay its associated tax liabilities. 3cdc is currently operating at a loss, therefore the calculated income tax provision is immaterial and no provision is recorded in the financial statements. 3cdc has created numerous single member limited liability companies to carry out its mission which are disregarded for federal tax purposes. 3cdc is the sole member, therefoe, the transactions of these entities are reported to the internal revenue service on 3cdc's tax return. Otr has created a single memeber limited liability company to carry out its mission. That entity is disregarded for federal tax purposes. Otr is the sole member, therefore, the transactions of the entity are reported to the internal revenue service on otr's tax return. Various limited liability companies have been created as part of new markets tax credit (nmtc) financing structures and are partnerships for federal tax purposes where 3cdc is the majority member and related and unrelated parties are the non-controlling members. As part of various historic tax credit (htc) financing structures, another wholly owned subsidiary (htc manager) is a not-for-profit organization created as the managing member of several partially owned entities (individually and collectively, htc mt) which own a leasehold interest in depreciable, tangible property and that have at least one member that is not a tax-exempt entity. The organization elected not to be treated as a tax-exempt entity for purposes of sections 168(h) (5) and (6) of the code. By this election, any gain recognized by the disposition of an interest in the htc manager or any dividends paid to 3cdc shall be treated as unrelated business taxable income under section 511 of the code. 3cdc did not dispose of any interest in the htc manager and no dividends were paid to 3cdc for the years ending december 31, 2024 and 2023. Htc manager has created various limited liability companies to carry out its mission. 3cdc and otr follow guidance that clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a tax return, including issues relating to financial statement recognition and measurement. This guidance provides that the tax effects from an uncertain tax position can only be recognized in the financial statements if the position is "more-likely-than-not" to be sustained if the position were to be challenged by a taxing authority. The assessment of the tax position is based solely on the technical merits of the position, without regard to the likelihood that the tax position may be challenged. 3cdc and otr have processes presently in place to ensure the maintenance of its tax-exempt status; to identify and report unrelated income; to determine its filling and tax obligations in jurisdictions for which its has nexus; and to identify and evaluate other matters that may be considered tax positions. 3cdc has determined that there are no material uncertain tax positions that require recognition or disclosure in the financial statements for the year ending december 31, 2024 and 2023.”