United Services Organizations

“Schedule D, Part V, Line 4 THE BOARD DESIGNATED PORTION OF THE ENDOWMENT IS RESTRICTED TO ASSIST THE UNITED SERVICE ORGANIZATIONS, INC. ("USO, INC.") IN DELIVERING ITS PROGRAMS AND SERVICES FOR MANY YEARS INTO THE FUTURE. THESE BOARD DESIGNATED CONTRIBUTIONS AND INVESTMENT EARNINGS ARE AVAILABLE TO FUND OPERATIONS; HOWEVER, CONTRIBUTIONS/EARNINGS HAVE NOT BEEN SPENT TO DATE. THE RESTRICTED PORTION OF THE ENDOWMENT IS TO BE PUBLICLY HELD IN PERPETUITY, WITH EARNINGS AVAILABLE TO ASSIST USO, INC. IN DELIVERING PROGRAMS AND SERVICES FOR MANY YEARS INTO THE FUTURE.”

“Schedule D, Part X, Line 2 PURSUANT TO US GAAP, THE FOUNDATION IS AUDITED AND REPORTED IN THE CONSOLIDATED AUDITED FINANCIAL STATEMENTS OF THE USO, INC. THE FOLLOWING FOOTNOTE IS INCLUDED IN THE CONSOLIDATED AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2015. The USO is exempt from federal income tax under Section 501(a) of the Internal Revenue Code (IRC) of 1986, as amended, as an organization described in IRC Section 501(c)(3). However, income generated from activities unrelated to the USO's exempt purpose is subject to tax under IRC Section 511. USO has processes presently in place to ensure the maintenance of its tax-exempt status; to identify and report unrelated income; to determine its filing and tax obligations in jurisdictions for which it has nexus; and to identify and evaluate other matters that may be considered tax positions. The USO did not have any material unrelated business income tax liability for the years ended December 31, 2015 and 2014.Therefore, no income tax liability has been provided in the accompanying consolidated financial statements. US GAAP requires that an income tax position be recognized or derecognized based on a "more likely than not" threshold. USO follows 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. The tax years ending December 31, 2015, 2014, 2013 and 2012 are still open to audit for both federal and state purposes. USO has determined that there are no material uncertain tax positions that require recognition or disclosure in the financial statements.”