Cascade Housing Association

Schedule D, Page 3, Part X

“Federal and state taxes - cascade and village oaks are exempt from federal and state income taxes under section 501(c)(3) of the internal revenue code and comparable state statutes and did not have any unrelated business income for the years ended december 31, 2022 and 2021. Due to their tax exempt status, cascade and village oaks are not subject to income taxes. Accordingly, these financial statements do not reflect a provision for income taxes and there are no other tax positions which must be considered for disclosure. Cascade and village oaks are required to file and do file tax returns with the irs and other taxing authorities. Pacific housing was organized as a nonprofit corporation however was not granted tax exempt status and is therefore required to file annual federal and state income tax returns. Due to operating losses, including operating loss carryforwards, no provision for income taxes was recorded for pacific housing in prior years. As further discussed in note 1, pacific housing realized a taxable gain of 6,304,433 during the year ended december 31, 2022. The utilization of all prior years operating losses in 2022 for federal and state income purposes reduced the current provision for income taxes by 361,432 in 2022. The current provision for income taxes for the year ended december 31, 2022, which is directly related to the gain on the sale of saddlecreek, is comprised of the following: federal 646,000 state 280,000 total 926,000 the limited partnerships and limited liability companies (hereafter referred to as "partnerships"), which are not 100% owned by cascade, pacific housing or village oaks, are taxable entities, however, each of the entities have elected to be treated as a pass-through entity for income tax purposes and, as such, are not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by their partners on their respective income tax returns. The partnerships' federal tax statuses are based on their legal status as a partnership. Accordingly, the partnerships are not required to take any tax positions in order to qualify as a pass-through entity. Accordingly, these financial statements do not reflect a provision for income taxes for the partnerships and the partnerships have no other tax positions which must be considered for disclosure. The partnerships are required to file and do file tax returns with the internal revenue service and other taxing authorities. Income tax returns filed by each of the entities are subject to examination by the internal revenue service for a period of three years. While no income tax returns are currently being examined by the internal revenue service, tax years since 2019 remain open and subject to examination.”