Castle Apartments Inc

Part X, Line 2:

“The Corporation accounts for uncertainty in income taxes in accordance with the Income Tax Topic of the Financial Accounting Standards Boards Accounting Standards Codification. The Corporation had not timely filed its required Form 990 tax returns for tax year 2004, and for fiscal year ended March 31, 2005 through tax year 2011. The Corporation is required to file a federal income tax return, which represents the major tax jurisdiction of the Corporation. As of March 31, 2017, all federal Form 990 tax returns have been filed. The statute of limitations begins the date the returns were filed in 2012, and remains open for three years from that date for all years the Corporation was considered a non-profit organization. For tax years 2011 and 2012, the statute of limitation remains open as the Corporation was considered a C-Corporation for this period and no return was filed. During 2010, the Corporation automatically lost its Section 501(c)(3) status as a result of failing to file tax returns for four consecutive years starting in tax year 2007. The ramifications of this may result in substantial tax penalties. The estimated penalties for non-filing are $10,000 per year. The Corporation has recorded estimated tax penalties for non-filing from 2004 through 2011 to be approximately $80,000. In addition, interest related to the potential tax liability is estimated at $340. Interest and penalties are recorded and included in the liability calculation. In addition, the Corporation had determined the potential tax liability associated with taxation as a C-Corporation to be $26,560, which includes both federal and State of Connecticut liabilities. Therefore, the total potential tax liability is estimated at approximately $106,900 at March 31, 2017, and is included in miscellaneous long-term liability on the statement of financial position. The Internal Revenue Service (the "IRS") has reinstated the Corporation's tax exempt status effective August 27, 2012. There has been no communication from the IRS regarding the acceptance of the late Form 990 tax returns. At this time it is unclear of the outcome; therefore, the liability remains.”