KBK Capital Trust I 9.50% TruPS (fka KBKCP)

[Enterprising Investor]

Excerpt from the U.S. Growth Fund Corporation Shareholder Letter (9/25/17)

Recently, we learned that the Company may have a duty to issue Internal Revenue Form 1099s reflecting the holder's liability for the original issue discount, relating to the accumulated deferred dividends ("OID") for tax periods dating back to the year ending December 31, 2010. We are working diligently with the Company's tax advisors to determine the aggregate amount to be reported on these IRS Form 1099s. Our best estimate is that the aggregate unreported income could be as much as $19.00 per unit. We plan to issue these IRS Form 1099s to holders of record once we have determined the correct amount to report, if any. If we determine the Company indeed has a duty to issue IRS Form 1099s for the tax year ending December 21, 2017, and or prior periods, we would expect to do so no later than March 30, 2018.

For holders of these units in tax-deferred accounts, such as individual retirement accounts, receipt of the catch-up IRS Form 1099s may have no material effect. However for those holding units in non tax-deferred accounts, this could result in a tax liability of up to $7.00 per unit, please penalties and interest, depending on the holders tax bracket and date of acquisition. Because the Company continues to operate under the forbearance agreement ending March 31, 2020, no dividends or distributions are likely to be paid in the near future. Consequently, unit holders may be liable for income taxes relating to the OID for the tax year ending December 31, 2017, with no offsetting cash distributions from the Company in the near future, unit holders may also be liable for income taxes, penalties and interest on the unreported OID from the prior periods. Holders are advised to review OMB No. 1545-0117 and consult with their tax advisor to determine the likely impact and best course of action under their particular circumstances

Although we are not qualified to provide tax guidance, you or you tax advisor are welcome to call or email with any questions. My email address is [e-mail] or my office phone is 817.953.6046.

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U.S. Growth Funds Corporation is the KBK Capital Trust I sponsor. Robert McGee is the Chairman and CEO.