La Jolla Country Club

Part X, Line 2:

“The club is exempt from federal income taxes under section 501(c)(7) of the internal revenue service code and related state of California code sections. However, both Federal and State tax laws impose a corporate income tax on net unrelated business taxable income. Unrelated business taxable income consists of net income from non-member activities and interest income. The club files its form 990 in the U.S. Federal jurisdiction and the state of California. The club's form 990 is subject to examination by the Internal Revenue Service for three years after it was filed. The club recognizes and measures its uncertain tax positions in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740, income taxes. This addresses the determination of whether tax benefits claimed or expected to be claimed on a tax retun should be recorded in the financial statements. Under FASB ASC 740, the club 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 the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upong ultimate settlement. FASB ASC 740 also provides guidance on the de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of December 31, 2020 and 2019, the club does not have a liability for unrecognized tax uncertainties. The club's policy is to record interest and penalties on uncertain tax positions as income tax expense. As of December 31, 2021 and 2020, the club has no accrued interest or penalties related to uncertain tax positions. The club is subject to routine audits by taxing jurisdictions. However, currently no audits for any tax periods are in progress. Management believes that the club is no longer subject to income tax examination for years prior to December 31, 2017.”