Bon Secours Hampton Roads Health System

PART X, LINE 2:

“Schedule d, part x, line 2 requires that the organization provide the text of the footnote to the organization's financial statements that reports the organization's liability for uncertain tax positions under asc 740. Asc 740 addresses the accounting for uncertainty in income taxes recognized in an entity's financial statements and prescribes a threshold of more-likely-than-not for recognition and derecognition of tax positions taken or expected to be taken in a tax return. The adoption of asc 740 by bon secours mercy health, inc. On september 1, 2007 did not have a material impact on bsmh's consolidated financial statements. As the organization does not conduct a separate audit of its financial statements, below is the related statement from the bon secours mercy health, inc. Consolidated audited financial statements: the system and most of its subsidiaries (including certain joint venture entities) are exempt from federal income taxes under section 501(c)(3) of the internal revenue code of 1986, as amended. The system accounts for uncertain tax positions in accordance with asc topic 740, income taxes. Their related income is exempt from federal income tax under section 501(a). The system accounts for uncertainty in income tax positions by applying a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The system has determined that no significant unrecognized tax benefits or liabilities exist as of august 31, 2018 or 2017. Accounting for uncertainty in income taxes, asc topic 740-10 prescribes a comprehensive model for how an organization should measure, recognize, present, and disclose in its financial statements uncertain tax positions that an organization has taken or expects to take on a tax return. The system is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The system believes it is no longer subject to income tax examinations for years prior to 2013. As of august 31, 2018 and 2017, the system has no uncertain tax positions. The system's taxable subsidiaries had approximately $97,815 and $106,393 of net operating loss carryforwards as of august 31, 2018 and 2017, respectively, which expire in varying periods through 2037 and are available to offset future taxable income. The system accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect during the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Interest and penalties related to income taxes are accounted for as income tax expense. The system's deferred tax assets are fully reserved at august 31, 2018 and 2017 as the system considers it more likely than not that these amounts will not be recognized. On december 22, 2017, the president signed into law h.r. 1, originally known as the tax cuts and jobs act. The act significantly revises the u.s. Corporate income tax by, lowering the statutory corporate tax rate from 35% to 21% and eliminating certain deductions. The new law also includes several provisions that result in substantial changes to the tax treatment of tax-exempt organizations and their donors. The system has reviewed these provisions and the potential impact and concluded the enactment of h.r. 1 will not have a material effect on the operations of the organization.”