Laborers International Union of North America

Part X-fin 48 Footnote

“Accounting for the uncertainty of tax positions can impact the financial statements. Even though DEROC is exempt from income taxes, DEROC must still consider whether its exempt income and other activities might be determined to be unrelated business income, and whether the DEROC has properly maintained its tax exempt status. Fasb asc 740(formerly FIN # 48 ), published by the Financial Accounting Standards Board, addresses the issue of accounting for the uncertainty of material tax positions impacting the financial statements. The Officers have adopted the provisions of FASB ASC 740 effective May 31, 2009. The accounting for all material positions taken, or expected to be taken, on any income tax return is governed by FASB ASC 740. Income tax returns include those positions that were filed or that should have been filed with Federal taxing authorities. It is the Officers' policy to assess all material postions taken on any federal income tax return. The Officers will require its legal and tax counsel to communicate to them all such uncertain tax positions in order to evaluate the impact of the tax position and the reporting and disclosure required. The requirement will apply to not only the current reporting year but also to all prior open reporting years that could still be subject to examination by a taxing authority. The Officers have determined that any material uncertain tax positions that are presented to the Officers will be recognized and measured using a " more-likely-than-not ", (MLTN) threshold. The MLTN threshold means that; 1. A benefit related to an uncertain tax position may not be recognized in the financial statements unless it is MLTN that the position will be sustained based on its technical merits, and 2. There must be more than a 50 % likelihood that the position would be sustained if challenged and considered by the highest court in the relevant jurisdiction. Measurement of any uncertain tax position will require calculating the cumulative probability of an outcome either for or against the tax position. The tax benefit of a qualifying position is the largest amount of tax benefit that is more than 50 % likely to be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. Initial recognition of an uncertain tax position will require continued reassessment of the tax position on an annual basis. As of each year end any unresolved uncertain tax postions must be reassessed, and the Officers must determine whether; 1. the factors underlying the sustainability assertions have changed and, 2. the amount of the recognized tax benefit is still appropriate. Developments such as case law, changes in tax law, new rulings or regulations issued by taxing authorities, could affect whether a tax position should be recognized or the amount that should be reported. DEROC will be required to accrue interest and penalties that, under present tax law, the Local would incur if the uncertain tax position ultimately were not sustained. For the year ending May 31, 2018, no uncertain tax positions were determined to exist. For the fiscal year ending May 31, 2018 there are no identified material uncertain tax positions for the open years of 2013, 2014, 2015, 2016 & 2017 with the filing of any U.S. Federal Income tax return. Tax returns have been filed for the years 2012 - 2017 and the statute of limitations, pursuant to IRC Section 6501, will expire for the year 2013 upon the filing of the 2018 tax return.”