Acrmd Community Mental Retardation Services Inc.

PART X, LINE 2:

“Community, according to the internal revenue service ("irs"), was granted tax-exempt status under section 501(c)(3) of the internal revenue code and under the corresponding provisions of the new york state and new york city income tax laws. Enterprise is wholly-owned by community and its activities are reflected in community's tax filings. Under these provisions, the agency is exempt from federal, state and new york city income taxes and, therefore, has made no provision for income taxes in the accompanying consolidated financial statements. The agency follows the accounting standard for uncertainty in income taxes. The standard prescribes a minimum recognition threshold and measurement methodology that a tax position taken or expected to be taken in a tax return is required to meet before being recognized in the consolidated financial statements. It also provides guidance for de-recognition, classification, interest and penalties, disclosure and transition. The agency is subject to audit by tax authorities. In assessing the realizability of tax benefits, management considers whether it is more likely than not that some portion or all of any tax position will not be realized. Management believes that its tax-exempt status would be sustained upon examination. Management believes that it has appropriate support for the positions taken on its tax returns. Nonetheless, the amounts ultimately paid, if any, upon resolution of the issues raised by the taxing authorities may differ materially from the amounts accrued for each year. If applicable, the agency would classify any interest and penalties on underpayments of income tax as miscellaneous expenses. The agency files federal and new york state informational returns. With few exceptions, the agency is no longer subject to federal or state income tax examinations for fiscal years before 2014.”