Peninsula Generation Cooperative

Schedule D, Part X, Line 2 FIN 48 (ASC 740) footnote

“Wolverine and Peninsula are not-for-profit corporations, generally exempt from income tax under Section 501(c)(12) of the Internal Revenue Code. However, activities with non-member customers are subject to federal income taxes. Wolverine and Peninsula had no federal income tax liability as of December 31, 2024, or 2023. Spartan applies the liability method for accounting for income taxes, under which deferred tax assets and liabilities are calculated based on differences between the financial reporting and tax basis of assets and liabilities that will result in future taxable or deductible amounts. These deferred tax amounts are determined using enacted tax laws and rates applicable to the periods when the temporary differences are expected to impact taxable income. Valuation allowances are recorded when necessary to adjust deferred tax assets to the amount expected to be realized. Income tax expense represents the tax payable or refundable for the period, adjusted for any changes in deferred tax assets and liabilities during that time. Uncertain tax positions are recognized and measured in accordance with the provisions outlined in FASB ASC 740. A tax position is recognized as a benefit only if it is "more likely than not" that the position would be upheld in a tax examination, which is assumed to occur. The recognized amount is the largest tax benefit that has more than a 50% likelihood of being realized upon examination. For tax positions that do not meet the "more likely than not" threshold, no tax benefit is recorded. Spartan is subject to federal income tax. Wolverine and both of its subsidiaries are subject to the Michigan Corporate Income Tax. However, for cooperatives (Wolverine and Peninsula), only activities involving non-member customers are taxable. Wolverine files a unified tax return. With a few exceptions, Wolverine is no longer subject to examination by taxing authorities for years on or before 2020. Wolverine does not anticipate any significant changes in the total amount of unrecognized tax benefits over the next 12 months. Wolverine accounts for interest and/or penalties related to income tax matters as interest expense and income tax expense, respectively. As of December 31, 2024, and 2023, Wolverine did not have any amounts accrued for interest or penalties.”