Lectica Inc Fka Dev Test Svs

Schedule D, Page 3, Part X

“Lectica is a massachusetts not-for-profit corporation, which is exempt for federal income tax purposes under section 501(c) (3) of the internal revenue code since inception. Accordingly, no provision for federal or state income taxes has been recorded. There was no interest or penalties to the internal revenue service included in these financial statements. Lectica's tax returns are generally subject to examination by the internal revenue service and the state of massachusetts for a period of three years for the date they are to be filed. The years ended june 30, 2012, 2013, and 2014 remain open to examination. The subsidiary elected to be taxed as a corporation. The subsidiary follows the provisions of fasb asc 740-10-50, "income taxes-overall- disclosure." fasb asc 740-10-50 sets forth a recognition threshold and measurement attribute for financial statement recognition of positions taken or expected to be taken in income tax returns. Fasb asc 740-10-50 had no material impact on the organization's financial statements. The subsidiary's tax years ended june 30, 2013 and 2014 remain open to examination by the taxing jurisdictions to which the subsidiary is subject. Income tax expense was 0 and 2,000 for the subsidiary for the years ended june 30, 2014 and 2013, respectively. In the event the organization concludes that they are subject to interest and/or penalties arising from uncertain tax positions, the organization will present interest and penalties as a component of income tax expense. Lectica is required to report unrelated business income to the internal revenue service and the appropriate state taxing authorities. Lectica provides services to the subsidiary. The activity is not considered to be unrelated business activity under internal revenue service regulations and accordingly defined net income from the operations is not taxable.”