Rollins Brook Community Care

Part X, Line 2:

“The filing organization is a subsidiary organization within Adventist Health System (AHS). The consolidated financial statements of AHS contain the following FIN 48 footnote: Please note that dollar amounts are in thousands. Healthcare Corporation and its affiliated organizations, other than North American Health Services, Inc. and its subsidiaries (NAHS), are exempt from state and federal income taxes. Accordingly, Healthcare Corporation and its tax-exempt affiliates are not subject to federal, state, or local income taxes except for any net unrelated business taxable income. For the years ended December 31, 2013 and 2012, unrelated business income activities conducted by Healthcare Corporation and its tax-exempt affiliates did not generate a material amount of combined federal, state and local income tax. NAHS is a wholly owned, for-profit subsidiary of Healthcare Corporation. NAHS and its subsidiaries are subject to federal and state income taxes. NAHS files a consolidated federal income tax return and, where appropriate, consolidated state income tax returns. For the years ended December 31, 2013 and 2012, NAHS generated taxable income of approximately $500 and $2,100, respectively. This taxable income was fully offset by net operating loss carryforwards for federal income tax purposes. Although one state in which NAHS conducts business has suspended the utilization of net operating loss carryforwards for the year ended December 31, 2013, no material state income tax liability resulted. Accordingly, there is no provision for current federal or state income tax for the years ended December 31, 2013 and 2012. NAHS also has temporary deductible differences of approximately $65,000 and $64,800 at December 31, 2013 and 2012, respectively, primarily as a result of net operating loss carryforwards. At December 31, 2013, NAHS had net operating loss carryforwards of approximately $64,200 of which $21,000 will expire in 2023, with the remaining $43,200 expiring beginning in 2018 through 2026. Some of these net operating losses are subject to the separate return limitation year rules. Deferred taxes have been provided for these amounts, resulting in a net deferred tax asset of approximately $24,700 and $24,600 at December 31, 2013 and 2012, respectively. A full valuation allowance has been provided at December 31, 2013 and 2012, respectively, to offset the deferred tax asset since Healthcare Corporation has determined that it is more likely than not that the benefit of the net operating loss carryforwards will not be realized in future years. The Income Taxes Topic of the ASC (ASC 740) prescribes the accounting for uncertainty in income tax positions recognized in financial statements. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. There were no material uncertain tax positions as of December 31, 2013 and 2012.”