Tuskegee University

“The Universitys collections, which were acquired through purchases and contributions since the universitys inception, are not recognized as assets on the statements of financial position. Purchases of collection items are recorded as decreases in the unrestricted net assets in the year in which the items are acquired, or as temporarily or permenently restricted net assets used to purchase the items are restricted by donors. Proceeds from deaccessions or insurance recoveries are reflected as increases in the appropriate new asset classes. The Universitys collections are made up of artifacts of historical signifcant, scientific speciemens, manuscripts, letters, documents, books, and art objects that are held for educational, research, scientific, and cultural purposes. Each of the items is cataloged, preserved, and cared for, and activities verifying their existence and assessing their condition are performed continiously. The Collections are subject to a policy that requires the proceeds from their sales to be used to acquire other items for collections.”

“Endowment funds are used to generate earnings and income to support the scholarships and general operations of the university.”

“The University is exempt from Federal and state injcome taxes under Section 501a as an entity descriped in Section 501c3 of the Internal Revenue Code of 1986, asa amended. The University is subject to tax on net income derived from unrelated buiness activities. The Universsssity operates The Kellogg Conference Center, which is subject to tax on unrelated business income. For the year ended June 30, 2019, The Kellogg Center incurred a net loss of X,XXX,XXX loss of 2,102,553 for the year ended June 30, 2018. Accordingly, no tax liability was incurred or recorded for this year. As of June 30, 2018, The University has a net operating loss carryforward of 26,646,346 to offset future taxable unrelated business income generated by the required by The Kellogg Conference Center 24,543,793 as of June 30, 2018. As requirted by the Interrnal Revenue Service Regulations, the University annually files Form 990 Return of Organization Exempt From Income Tax, with the Interanl Revenue Service. The University also filesform 990T, Exempt Organization Business Income Tax Return, for the operations of The Kellogg Confewrence Center.”

“The University follows the accounting guidance for uncertainty in income taxes using the provisions of FASB ASC 740, Income Taxes. Using thatguidance, tax postions initially need to be recognized in the financial statements when it is more likely that not, the position will be sustained upon examination by the taxing authorities. Such tax provisions initiaslly and subsequently need to be measured as the largest amount of tax benefit that has a grester than 50 percent likelihood of being realized upon ultimate settlement with the taxing autehority assuming full knowledge of the position and relevant facts. The University believes that it has appropruiate support for the income tax positions taken and to be taken on its tax returns and that its accurals for tax liabilities are adequate for all open tax years based on an assessment of many factors, including experience and interpretation of tax laws applied to the facts of each matter. The University has concluded that there are no significant uncertain tax positions requring disclosure, and there are no material amounts of unrecognzec tax benefits.”