Spectrum Human Services Inc.

“The intended use of the Endowment Fund is to support the charitable and human services activity of Spectrum Human Services as described in its charger and its mission statement.”

“Spectrum and its subsidiaries have received notification that they qualify as a tax-exempt organization under Section 501 (c)(3) of the U.S. Internal Revenue code and corresponding provisions of State law. However, any unrelated business income may be subject to taxation. The Organization follows the standard relating to the accounting for uncertainty in income taxes. The tax effects from an uncertain tax position can be recognized in the financial statements, only if the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Organization recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would be more likely than not to sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Organization applied the accounting standard to all tax positions for which the statute of limitations remained open. Based on its evaluation, the Organization has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. The Organization is not currently under examination by any taxing jurisdiction. Primacare operates as a limited liability company, which is not a tax-paying entity for Federal income tax purposes and thus, no provision for Federal income taxes is reflected in the financial statements. The income or loss of the entity is passed through to the members and reported on their respective income tax returns. Included in the state return is a tax on taxable income and tax on adjusted gross receipts. It is Primacare's management policy to report both components of the tax as an income tax. Deferred income taxes are provided for timing differences between financial reporting and income tax purposes related to the Michigan Business Tax. As of December 31, 2016 and 2015, there were no timing differences and therefore no deferred tax assets or liabilities have been recoreded.”