Center for Excellence in Higher Education Inc.

PART X, LINE 2:

“The organization is exempt from federal income taxes under section 501(c)3 of the internal revenue code and therefore has made no provision for federal income taxes in the financial statements. In addition, the organization has been determined by the internal revenue service not to be a "private foundation" within the meaning of section 509(a) of the internal revenue code. The organization's forms 990, return of organization exempt from income tax, for the years ending december 31, 2017, 2016, 2015,& 2014, are subject to examination by the irs, generally for three years after they were filed. Generally accepted accounting principles require tax effects from an uncertain tax position to be recognized in the financial statement only 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 soley on the technical merits of the position, without regard to the likelihood that the tax position may be challenged. If an uncertain tax position meets the more-likley-than-not threshold, the largest amount of tax benefit that is greater than 50% likely to be recognized upon ultimate settlement with the taxing authority is recorded. The organization's primary tax positions relate to its status as a not-for-profit entity exempt from income taxes and classification of activities related to its exempt purpose. Management has evaluated the tax positions reflected in the organization's tax filings and does not believe that any material uncertain tax positions exist. Shc, cad, caa, ccsd, casi and cci filed their tax returns as subchapter "s" corporations. Under these provisions, the companies generally do not pay income taxes on their taxable income. Instead, the stockholder is liable for individual income taxes on the companies' taxable income. The companies' forms 1120s, u.s. Income tax return for an s corporation, for the years ending december 31, 2012 is subject to examination by the irs, generally for three years after they were filed. Generally accepted accounting principles require tax effects from uncertain tax position to be recognized in the financial statement only 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 position may be challenged. If an uncertain tax position meets the more-than-likely-than-not threshold, the largest amount of tax benefit that is greater than 50% likely to be recognized upon ultimate settlement with the taxing authority is recorded. Management has evaluated the tax positions reflected in the companies' tax filings and does not believe that any material uncertain tax positions exist. Currently, the organization is undergoing audit by the irs for the 2012 thru 2015 tax years. In addition, shc, cad, caa, ccsd, casi, and cci are also being audited by the irs for the 2012 tax year. The irs has asserted changes to the shc, cad, caa, ccsd, and cci 2012 tax returns; however, cehe would not be liable for any tax due from the changes as any tax due would be payable by the stockholder. California college,inc., is under audit by the state of california for the 2012 tax year. Stevens-henager college, inc. Is under audit by the state of utah for the 2012 tax year.”