United Wisconsin Services, Inc. & Subsidiaries
Federal Income Tax Allocation Agreement
For the Periods Starting
January 1, 1996 and December 3, 1996
This Consolidated Federal Income Tax Allocation Agreement is entered into this
20th day of December, 1996 to be effective for the taxable periods starting
January 1, 1996 for 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), AMS
HMO Holdings, Inc. (formerly known as United Wisconsin Capital Corporation
(UWCC)), Unity Health Plans Insurance Corporation (Unity), HMO-W, Inc. (HMO-W),
Hometown Insurance Services, Inc. (HTWN), United Heartland, Inc. (UHI), and
Meridian Marketing Services, Inc. (MMS) and for the taxable period starting
December 3, 1996 for American Medical Security Holdings, Inc., American Medical
Security, Inc., American Medical Security Insurance Company, Continental Plan
Services, Inc., Nurse Healthline, Inc., Accountable Health Plans, Inc. (formerly
known as Accountable Health Plans of Texas, Inc.), AMS Provider Partnerships,
Inc., Unity HMO of Illinois, Inc., American Medical Security Insurance Company
of Ohio, American Medical Security Insurance Company of Georgia.
Now, therefore, in consideration of their mutual promise and other good and
valuable consideration, UWSI and each of the above mentioned corporations on its
behalf agrees to the attached Federal Tax Allocation Agreement dated December
20, 1996.
In witness whereof, the parties hereto have executed this amendment as of the
day and year first above written.
Exhibit I
December 20, 1996
Federal Tax Allocation Agreement for the UWSI Group
Effective for the Periods Starting
January 1,1996 and December 3,1996
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
1.150255(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:
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 totaled resulting in the tax
allocation to that member for that period.
_________________________
(1) As defined in Section 59A(b) of the IRC.
United Wisconsin Services, Inc.
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Vice President & Treasurer
United Wisconsin Insurance Company
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
United Wisconsin Proservices, Inc.
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
Compcare Health Services Insurance Corporation
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
Meridian Managed Care, Inc.
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
Meridian Resource Corporation
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
Valley Health Plan, Inc.
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
AMS HMO Holdings, Inc.
By:/s/ Xxxxxxx X. Day
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Xxxxxxx X. Day
Treasurer
Unity Health Plans Insurance Corporation
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
HMO-W, Incorporated
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
Hometown Insurance Services, Inc.
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
United Heartland, Inc.
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
Meridian Marketing Services, Inc.
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Treasurer
American Medical Security Holdings, Inc.
By:/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
Vice President & Secretary
American Medical Security, Inc.
By:/s/ Xxxxxxx X. Day
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Xxxxxxx X. Day
Vice President
AMS Provider Partnerships, Inc.
By:/s/ Xxxxxxx X. Day
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Xxxxxxx X. Day
Treasurer
Accountable Health Plans, Inc.
By:/s/ Xxxxxxx X. Day
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Xxxxxxx X. Day
Treasurer
American Medical Security Insurance Company
By:/s/ Xxxxxxx X. Day
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Xxxxxxx X. Day
Treasurer
Continental Plan Services, Inc.
By:/s/ Xxxxxxx X. Day
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Xxxxxxx X. Day
Treasurer
Nurse Healthline, Inc.
By:/s/ Xx. Xxxxxxx X. Xxxxx
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Xx. Xxxxxxx X. Xxxxx
Vice President & Secretary
Unity HMO of Illinois, Inc.
By:/s/ Xxxx X. Minsolff
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Xxxx X. Xxxxxxxx
Vice President & Secretary
American Medical Security Insurance Company of Ohio
By:/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Secretary & Treasurer
American Medical Security Insurance Company of Georgia
By:/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Vice President
