Melwood-Dolly Housing Inc.

PART X, LINE 2:

“The organization is generally exempt from federal income taxes under the provisions of section 501(c)(3) of the internal revenue code (irc). In addition, the organization has been determined by the internal revenue service (irs) not to be a private foundation. Income which is not related to exempt purposes, less applicable deductions, is subject to federal and state income taxes. For the years ended june 30, 2016 and 2015, the organization had no taxable unrelated business income and, accordingly, no provision for income taxes is required in the accompanying financial statements. The organization follows the accounting standard on accounting for uncertainty in income taxes, which addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, the organization may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The guidance on accounting for uncertainty in income taxes also addresses de-recognition, classification, interest and penalties on income taxes, and accounting in interim periods. Management evaluated the organization's tax positions and concluded that the organization has taken no uncertain tax positions that require adjustment to the financial statements to comply with the provisions of this guidance. The organization files income tax returns in the u.s. Federal jurisdiction. Generally, the organization is no longer subject to income tax examinations by the u.s. Federal, state or local tax authorities for years before 2013.”