Phoenix Performing Arts Center Inc.

“The tax return is prepared following the irs instructions to include board designated assets in the endowment funds schedule of the return, schedule d, part v. The percentage of board designated or quasi-endowment assets of end of year endowment funds is reported on part v line 2a. Within the financial statements of the center, the board designated assets for endowment are reported as net assets without donor restrictions. On form 990, part x, balance sheet, the board designated assets are included in line 27 unrestricted net assets.”

“The center is a beneficiary of a perpetual trust held by a third party. This beneficial interest is recorded as a beneficial interest asset and as perpetual restricted net assets in the statement of financial position. The center also entered into an agreement with and transferred certain assets to the arizona community foundation acf to establish an endowment fund for the purpose of ongoing support and general operation of the center. The centers restricted net assets were restricted for the following purposes purpose restriction - agile project , time restrictions for future production periods, and a perpetual restriction on the beneficial interest in assets held in a perpetual trust.”

“The center is annually required to file a return of organization exempt from income tax form 990 with the irs. In addition, the center is generally subject to income tax on net income that is derived from business activities that are unrelated to its exempt purpose. Management has determined the center has no taxable unrelated business income related to the centers activities and it has not filed the exempt organization business income tax return irs form 990-t, or its arizona equivalent, form 99-t. The tax years ended june 30, 2018, 2019, and 2020 are still open to audit for both federal and state purposes. Management believes that it has appropriate support for any income tax positions taken, and, as such, does not have any uncertain tax positions that are material to the financial statements. The center would recognize future accrued interest and penalties related to unrecognized tax benefits and liabilities in income tax expense if such interest and penalties are incurred.”