THE LYNDE AND HARRY BRADLEY FOUNDATION, INC.

UNRELATED BUSINESS INCOME TAX

1999 TAXES

(Information Only -- No Action Required)

Federal Unrelated Business Income Tax (UBIT)

The Foundation filed Form 990T and paid taxes associated with UBIT for the first time in 1999. The total taxable income from all reporting partnerships was $557,576. The total taxable income was reduced by the net operating loss carryover and a miscellaneous deduction for a net taxable income of $508,769. The tax paid was $172,981.

The following partnerships contributed to the tax or provided a tax benefit.

Partnership	Taxable Income/(Loss)	Tax (Benefit)

Boston Ventures $149,336	$50,706

GS Private Equity	$18,006	$6,114

Whitehall IX	$564,502	$191,668

CCP	($114,406)	($38,899)

Whitehall X	($33,734)	($11,470)

Greenwhich	($26,129)	($8,884)

Net Operating Loss	($47,807)	($16,254)

$509,768

Misc. Exemption	(1,000)

Total	$508,768	$172,981

State Unrelated Business Income Tax

This year the Foundation filed initial tax returns in eighteen states. The Foundation's obligation to file state returns is directly connected to the partnerships generating federal UBIT. The filings resulted in the Foundation paying cumulative state taxes of $19,285.20. Additional penalties and interest may be assessed if states determine that the Foundation should have made estimated payments or additional filings. It is also likely that the initial filing may lead some states to inquire about the Foundation's activities. We will have to respond to those inquires.

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There are fifteen other states where partnerships reported total net losses in 1999. Consistent with past practice, except for Wisconsin, the Foundation did not file state returns to report the losses. The partnerships are expected to eventually begin generating unrelated business income (UBI) at which time returns will be filed.

The partnerships investments create nexus* in most states and some cities. In total, the Foundation had UBI in forty-two states. The number of states for which each partnership has nexus is:

Whitehall X and IX reported UBI in thirty-three states and one city.

Greenwich reported UBI in twelve of the same states and the same city.

Boston Venture reported UBI in seven states, adding one new state.

CCP reported UBI in twenty-one states, adding eight new states.

State tax compliance will result in different strategies and additional filings going forward. This November and December the financial staff will file year 2000 estimated tax payments in the states where 1999 tax returns were filed. The partnerships do not provide estimated income for states therefore the financial staff will adopt the method of paying an equivalent of the prior year's tax. In the first quarter of next year, the financial staff will file ten additional extensions for states that do not accept the federal extension. It is unlikely that all the partnerships will report UBI by state before extension due dates. Estimates will be made of each state's tax liability using the information available.

There are a few states that do not require a tax filing for UBI. The exemption for filing cannot be taken for granted and must be monitored each year for changes in the tax law. The filing requirements will be reviewed in the first and second quarter of next year. Next year the financial staff will consider the merits of filing returns in states where there are net losses. A judgment call will also be made on an annual basis as to whether there should be an additional level of review by the outside accounting firm. A review may be requested, for example, where a state's tax liability is large or the state is perceived to be aggressive.

*Nexus is the minimum presence defined by a state that constitutes "doing business" in the state. An entity doing business in a state generally must file a tax return in that state.

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