Delta Dental of Missouri

Schedule D, Part X, Line 2

“Fin 48 footnote the organization is exempt from income taxes under section 501 of the internal revenue code and a similar provision of state law. Advantica administrative services, inc. And its wholly-owned subsidiaries are subject to both federal and state income taxes and account for income taxes in accordance with income tax accounting guidance (asc 740 income taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. Uncertain tax positions are recognized if it is more likely than not, based on the technical merits, that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the terms examined and upon examination also include resolution of the related appeals or litigation processes, if any. A tax position that meets the more likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information. The determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management's judgment. The organization recognizes interest and penalties on income taxes as a component of income tax expense. On a consolidated basis, advantica administrative services, inc. And its subsidiaries had an operating (loss) gain totaling $(14,829) and $456,351 as of december 31, 2022 and 2021, respectively. At december 31, 2022 and 2021, advantica administrative had net operating loss carryforwards of approximately $18,659,000 and $20,941,000, respectively. Advantica administrative and its subsidiaries had deferred tax assets of approximately $1,315,000 and $4,414,000 at december 31, 2022 and 2021, respectively, nearly all of which arise from these net operating loss carryforwards. Due to the remaining uncertainty regarding whether these will be realized, a full valuation allowance has been recorded against these deferred tax assets at december 31, 2022 and 2021. The organization and its subsidiaries are currently open to examination under the statute of limitations by the internal revenue service and states in which it files for the years ended december 31, 2019 through 2022.”