American Communities Trust Inc

PART X, LINE 2:

“The organization and bfh are exempt from income taxes under section 501(c)(3) of the irc and did not have any unrelated business income for the years ended december 31, 2024 and 2023. Heb and bfh ll have elected to be treated as pass-through entities for income tax purposes, and as such are not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and reported by their owners on their respective tax returns. Heb and bfh ll's federal tax status as pass-through entities is based on their legal status as limited liability companies. Accordingly, these consolidated and combined financial statements do not reflect a provision for income taxes for heb and bfh ll and these entities have no other tax positions which must be considered for disclosure. Fawb is wholly-owned by the organization and is disregarded for income tax purposes. Bfh member elected to be treated as a c-corporation for income tax purposes and thus accounts for income taxes in accordance with the liability method as required under guidance from the fasb on accounting for income taxes as interpreted by clarifying guidance issued by the fasb. Under the liability method, tax rates are applied to cumulative temporary differences based on how they are expected to affect the tax return. Deferred tax assets and liabilities are adjusted for tax rate changes. Under the guidance, income tax benefits are recognized and measured based upon a two-step model: 1) a tax position must be more likely than not to be sustained based solely on its technical merits in order to be recognized, and 2) the benefit is measured as the largest dollar amount of that position that is more likely than not to be sustained upon settlement. The difference between the benefit recognized for a position in accordance with this model for financial statements and the tax benefit claimed on a tax return is referred to as an unrecognized tax benefit. Bfh member accrues income tax-related interest and penalties, if applicable, within provision for income taxes. No deferred tax assets, including net operating loss carryforwards, or liabilities have been recognized as bfh member does not have future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases. No provision for income taxes has been recognized for the years ended december 31, 2024 and 2023. Bfh member has not taken any tax positions that would create unrecognized tax benefits. For income tax purposes, the organization and affiliates report on a calendar year-end basis. Income tax returns filed by the organization and affiliates are subject to examination by the internal revenue service for a period of three years. While no income tax returns are currently being examined by the internal revenue service, tax years since 2021 remain open for the organization and affiliates.”