Literacy and Evangelism Inc

Part X : FIN48 Footnote

“The Organization is exempt from federal and state income taxes under Internal Revenue Code Section 501(c)(3), though it is subject to tax on income unrelated to its exempt purpose, unless that income is otherwise excluded by the Code. In addition, the Organization qualifies for the charitable contribution deduction under Section 170(b)(1)(A) and has been classified as an organization that is not a private foundation under Section 509(a)(2). The accounting standard on accounting for uncertainty in income taxes 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 that 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. Examples of tax positions include the tax-exempt status of the Organization and various positions related to the potential sources of unrelated business taxable income (UBIT). 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. There were no unrecognized tax benefits identified or recorded as liabilities for fiscal year 2023 and 2022. Annually, the Organization files a Return of Organization Exempt from Income Tax (Form 990) with the Internal Revenue Service (IRS) and a related return with the state of Oklahoma. Additionally, the Organization files an Exempt Organization Business Income Tax Return (Form 990-T) with the IRS to report its unrelated business taxable income, if any. The statute of limitations for both federal and Oklahoma tax returns is three years, therefore all tax returns filed over three years ago are no longer subject to examination. During the years ending December 31, 2023 and 2022, the Organization generated unrelated business loss in connection with its short-term rental activity to non-missionaries. The net activity resulted in no tax expense on unrelated business income to the IRS, nor the state of Oklahoma.”