United Wisconsin Services, Inc. & Subsidiaries
Federal Income Tax Allocation Agreement
For the Period Starting October 1, 1994
This Consolidated Federal Income Tax Allocation Agreement is entered into this
3rd day of January, 1995 to be effective for the taxable periods starting
October 1, 1994 between United Wisconsin Services, Inc. (UWSI), United Wisconsin
Insurance Company (UWIC), United Wisconsin Proservices, Inc. (UWPS), Compcare
Health Services Insurance Corporation (CHSIC), Meridian Managed Care, Inc.
(MMC), Meridian Resource Corporation (MR), Valley Health Plan, Inc. (VHP),
United Wisconsin Capital Corporation (UWCC), Your Healthcare Plan, Inc. (YHP),
HMO of Wisconsin Insurance Corporation (HMOW), HMO-W, Inc. (HMOW-W), and
Hometown Insurance Services, Inc. (HTWN).
Now, therefore, in consideration of their mutual promise and other good and
valuable consideration, UWSI and each of the above mentioned corporations on its
own behalf agrees to the attached Federal Tax Allocation Agreement dated January
3, 1995.
In witness whereof, the parties hereto have executed this amendment as of the
day and year first above written.
United Wisconsin Insurance Company
By:/s/ C. Xxxxxx Xxxxx
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C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
United Wisconsin Proservices, Inc.
By:/s/ C. Xxxxxx Xxxxx
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C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Treasurer
United Wisconsin Services, Inc.
By:/s/ C. Xxxxxx Xxxxx
--------------------------------
C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Treasurer
Compcare Health Services Insurance Corporation
By:/s/ C. Xxxxxx Xxxxx
--------------------------------
C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Treasurer
Meridian Managed Care, Inc.
By:/s/ C. Xxxxxx Xxxxx
--------------------------------
C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Treasurer
Meridian Resource Corporation
By:/s/ C. Xxxxxx Xxxxx
--------------------------------
C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Treasurer
Valley Health Plan, Inc.
By:/s/ C. Xxxxxx Xxxxx
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C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Treasurer
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United Wisconsin Capital Corporation
By:/s/ C. Xxxxxx Xxxxx
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C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Treasurer
Your Healthcare Plan, Inc.
By:/s/ C. Xxxxxx Xxxxx
--------------------------------
C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Treasurer
HMO of Wisconsin Insurance Corporation
By:/s/ C. Xxxxxx Xxxxx
--------------------------------
C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Treasurer
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HMOW-W, Inc.
By:/s/ C. Xxxxxx Xxxxx
--------------------------------
C. Xxxxxx Xxxxx
Vice President
By:/s/ Xxxx X. Xxxxxx
--------------------------------
Xxxx X. Xxxxxx
Treasurer
Hometown Insurance Services, Inc.
By:/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
CEO
By:/s/ Xxxxx Xxxxxxx
--------------------------------
Xxxxx Xxxxxxx
Treasurer
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Exhibit I
January 3, 1995
Federal Tax Allocation Agreement for the UWSI Group
Effective October 1, 1994
The steps required to determine the federal tax or benefit allocated to each
member are as follows:
1. Determine each member's ordinary taxable income and net capital gain for
the year (before NOL carryforwards).
A member with ordinary income and/or net capital gain is charged a tax
expense equal to 35% of these amounts.
2. Determine each member's current year net capital loss and current year
ordinary loss. If a member's current year losses are used in the
consolidated return, the member receives a 35% tax benefit for the use of
its current year capital losses and a 35% benefit for the use of its
current year ordinary losses.
3. Determine each member's net operating loss (NOL) and capital loss
carryforwards that can be utilized in the consolidated tax return.
Carryforwards can be utilized in the order of taxable year in which such
losses are sustained beginning with the taxable year which ends earliest
and applying all losses from taxable years ending on the same date on a pro
rata
basis. The Separate Return Limitation Year (SRLY) rules also apply in
determining whether a loss carryover can be utilized.
Each member receives a 35% tax benefit if its NOL carryover is used to
offset ordinary income. If a capital loss and/or NOL carryover is used to
offset current year consolidated capital gain, the member also receives a
35% tax benefit.
4. If a member's ITC credit carryover is utilized in the consolidated tax
return, the member receives a tax benefit equal to 100% of the ITC
utilized.
5. A member will receive a benefit for 100% of the alternative minimum tax
credit attributable to that member that's utilized in the consolidated
return. the amount of alternative minimum tax credit of a member utilized
in any year is determined in accordance with the rules provided in Proposed
Treasury Regulation 1.1502-55(h).
The amount of the credit attributed to a member for any year is determined
in accordance with the rules provided in Proposed Treasury Regulation
1.1502-55(h).
6. A member is charged 100% of its ITC recapture for the year.
7. The consolidated environmental tax is allocated to a member in accordance
with the following formula:
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Member's modified alternative minimum taxable income (1)
Less: $2,000,000 divided by the number of members in the group
x .0012 =
Member's portion of consolidated environmental
tax
Note that a member with negative modified alternative minimum taxable
income will be allocated a tax benefit with respect to the environmental
tax.
8. A member is allocated alternative minimum tax equal to the alt min credit
that's attributed to that member for the year. (See point 5.)
9. Each member's tax charges and tax benefits are totalled resulting in the
tax allocation to that member for that period.
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(1) As defined in Section 59A(b) of the IRC.
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