Phoebe Physician Group Inc.

Schedule D, Page 3, Part X

“Phoebe putney health system, inc., phoebe putney memorial hospital, inc., phoebe worth medical center, inc., phoebe sumter medical center, inc., phoebe physician group, inc., and phoebe foundation, inc. Are not-for- profit corporations that have been recognized as tax-exempt pursuant to section 501(c)(3) of the internal revenue code. Phoebe putney indemnity, llc is not subject to federal income taxes due to its organization as a single member llc. Phoebe putney health ventures, inc. Is a for-profit entity. With respect to its for-profit entity as well as any unrelated business income generated through the tax exempt entities, the corporation accounts for income taxes using the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and income tax credit carryforwards. Deferred income tax assets or liabilities are measured using enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in rates is recognized in income in the period in which the enactment date occurs. The corporation is required to establish a valuation allowance for any portion of the deferred tax assets that management believes will not be realized. The accounting policies prescribe when to recognize and how to measure the financial statement effects of income tax positions taken or expected to be taken on its income tax returns. These rules require management to evaluate the likelihood that, upon examination by the relevant taxing jurisdictions, those income tax positions would be sustained. Based on that evaluation, the corporation only recognizes the maximum benefit of each income tax position that is more than 50% likely of being sustained. To the extent that all or a portion of the benefits of an income tax position are not recognized, a liability would be recognized for the unrecognized benefits, along with any interest and penalties that would result from disallowance of the position. Should any such penalties and interest be incurred, they would be recognized as operating expenses. Based on the results of management's evaluation, no liability is recognized in the accompanying balance sheet for unrecognized income tax positions. Further, no interest or penalties have been accrued or charged to expense as of july 31, 2016 and 2015 or for the years then ended. The corporation's tax returns are subject to possible examination by the taxing authorities. For federal income tax purposes, the tax returns essentially remain open for possible examination for a period of three years after the respective filing deadlines of those returns.”