Who is liable for individual federal income taxes for All County's income or loss?

According to All County's 2025 Franchise Disclosure Document, the company has elected to be taxed under Subchapter S of the Internal Revenue Code. Because of this election, All County does not pay federal or state corporate income taxes on its taxable income. Instead, the stockholders are liable for individual federal income taxes for their respective shares of the company's income or loss. The document states that no provision or liability for income taxes has been included in these financial statements.

This means that the profits and losses of All County are passed directly to its stockholders, who then report these on their individual income tax returns. This structure avoids double taxation, where the corporation is taxed on its profits, and then the stockholders are taxed again when they receive dividends.

For a prospective All County franchisee, this information is relevant because it clarifies that the financial statements of the company itself do not reflect any provision for income taxes. Instead, the tax liability rests with the stockholders. Franchisees should consult with a tax professional to understand the implications of this structure for their own tax planning.