How is Alloy, as a limited liability company, treated for federal and state income tax purposes?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
As a limited liability company, the Company is treated as a partnership for federal and state income tax purposes. Accordingly, no provision has been made for income taxes in the accompanying financial statements, since all items of income and losses are required to be reported on the income tax returns of the members, who are responsible for any taxes thereon.
The Company recognizes and measures its unrecognized tax benefits in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740, Income Taxes. Under that guidance, management assesses the likelihood that tax positions will be sustained upon examination based on the facts, circumstances and information, including the technical merits of those positions, available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information is available or when an event occurs that requires a change. There were no uncertain tax positions at December 31, 2024 and 2023.
The Company files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, Alloy Personal Training, LLC is treated as a partnership for federal and state income tax purposes. This means that Alloy itself does not pay income taxes. Instead, the company's income and losses are passed through to its members (owners), who then report these items on their individual income tax returns and are responsible for paying any taxes due. This is a common tax structure for limited liability companies (LLCs).
This pass-through taxation model means that Alloy does not have a provision for income taxes in its financial statements. The members of the LLC are responsible for reporting their share of the company's income or losses on their personal tax returns. This structure avoids the double taxation that can occur with corporations, where the corporation pays taxes on its profits, and then shareholders pay taxes on dividends they receive.
Alloy recognizes and measures unrecognized tax benefits according to Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740, Income Taxes. Management assesses the likelihood of tax positions being sustained upon examination, based on available information and the technical merits of those positions. The measurement of unrecognized tax benefits is adjusted when new information becomes available or an event necessitates a change. As of December 31, 2024 and 2023, Alloy had no uncertain tax positions.
Alloy files income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. Prospective franchisees should consult with a tax advisor to understand the full implications of this tax structure and how it will affect their individual tax situation.