AIDS Arms Inc.

Form 990, Schedule D, Part X, Line 2

“AAI AND AAPI ARE EXEMPT FROM FEDERAL INCOME TAXES UNDER 501(C)(3) OF THE uNITED STATES INTERNAL REVENUE CODE (THE "CODE"), EXCEPT TO THE EXTENT UNRELATED BUSINESS INCOME EXISTS. IN ADDITION, AAI AND AAPI HAVE BEEN DETERMINDED BY THE INTERNAL REVENUE SERVICE ("IRS") NOT TO BE A PRIVATE FOUNDATION WITHIN THE MEANING OF SECTION 509(A) OF THE CODE. FOR THE YEAR ENDED DECEMBER 31, 2016, AAI AND AAPI HAD NO NET UNRELATED BUSINESS INCOME. ACCORDINGLY, NO PROVISION FOR FEDERAL INCOME TAX HAS BEEN PROVIDED IN THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS. GAAP REQUIRES THE EVALUATION OF TAX POSITIONS TAKEN OR EXPECTED TO BE TAKEN IN THE COURSE OF PREPARING AAI'S AND AAPI'S TAX RETURNS TO DETERMINE WHETHER THE TAX POSITIONS ARE MORE LIKELY THAN NOT OF BEING SUSTAINED BY THE APPLICABLE TAX AUTHORITY. TAX POSITIONS NOT DEEMED TO MEET THE MORE LIKELY THAN NOT THRESHOLD WOULD BE RECORDED AS A TAX BENEFIT OR EXPENSE IN THE CURRENT YEAR. A RECONCILIATION IS NOT PROVIDED HEREIN, as the beginning and ending amounts of unrecognized benefits are zero, with no interim additions, reductions, or settlements. The organizations are relying on its tax-exempt status and its adherence to all applicable laws and regulations to preserve that status. However, the conclusions regarding accounting for uncertainty in income taxes will be subject to review and may be adjusted at a later date based on factors including, but not limited to, ongoing analysis of tax laws, regulations, and interpretations thereof. The organizations recognize interest and penalties, if any, related to uncertain tax positions as income tax expense. The organizations informational returns filed are generally subject to examination for three years after the later of the due date or date of filing. As a result, the organizations are no longer subject to examinations by tax authorities for years prior to fiscal year 2013.”