Dallas Development Fund

PART X, LINE 2:

“The company is exempt from federal income taxes, except for unrelated income, if any, under the provisions of section 501(c)(3) of the irc. For the years ended september 30, 2020 and 2019, the company did not have any unrelated business income. Accordingly, no provision for income taxes has been included in the accompanying consolidated financial statements. Dallas development fund management llc, ddf alpha, llc, and ddf bravo, llc, ddf charlie, llc, and ddf delta, llc have elected to be treated as pass-through entities for income tax purposes and, as such, are not subject to income taxes. Their federal tax status as pass-through entities is based on their legal status as limited liability companies. Accordingly, these subsidiaries are not required to take any tax positions in order to qualify as pass-through entities. As wholly-owned subsidiaries of the company, dallas development fund management llc, ddf alpha, llc, and ddf bravo, llc, ddf charlie, llc and ddf delta, are disregarded for income tax purposes. Effective october 1, 2013, dallas development fund holdings, llc 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. Dallas development fund holdings, llc 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 dallas development fund holdings, llc 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 september 30, 2020 and 2019 as dallas development fund holdings, llc does not have any activity. Dallas development fund holdings, llc has not taken any tax positions that would create unrecognized tax benefits. For income tax purposes, the company and subsidiaries report on a september 30th fiscal year-end basis. Income tax returns filed by the company and subsidiaries 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 2017 remain open.”