Peninsula Primary Care

Part X, Line 2:

“CHF, CHOMP, CHE, CHP, and PPC have been determined to be exempt organizations by the Internal Revenue Service and the California Franchise Tax Board and generally are not subject to taxes on income pursuant to Section 501(c)(3) and Section 23701(d) of the Internal Revenue Code and California Revenue and Taxation Code, respectively. Aspire, CCCMIC, CMN, and Coastal are taxable entities and income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the consolidated financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Aspire, CCCMIC, CMN, and Coastal have net cumulative losses and the deferred tax assets associated with these losses have been fully reserved. There were no tax provisions recorded for the years ended December 31, 2015 and 2014. The Organization assesses uncertain tax positions in accordance with the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 740-10, Income Taxes. The Organization recognizes the tax benefit from uncertain tax positions only if it is more likely than not that the tax positions will be sustained on examination by the tax authorities, based on the technical merits of the position. The tax benefit is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Organization recognizes interest and penalties related to income tax matters in operating expenses. There were no uncertain tax positions as of December 31, 2015 and 2014.”