For state income tax purposes, what kind of taxes is Annex Brands subject to?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company has elected, with the consent of the shareholders, to be taxed as an S Corporation for federal and state income tax purposes, whereby its taxable income or loss is included in the shareholders' personal federal and state income tax returns. Accordingly, no federal tax provision has been recorded in the Company's consolidated financial statements. For state income tax purposes, the Company is subject to certain minimum franchise taxes for the states in which the Company files its income tax returns. Management believes that the Company has not taken any significant uncertain tax positions and that it is no longer subject to income tax examinations for fiscal years prior to 2020 for state purposes and fiscal years prior to 2021 for federal purposes.
Source: Item 21 — Financial Statements (FDD page 109)
What This Means (2025 FDD)
According to the 2025 FDD, Annex Brands has elected to be taxed as an S Corporation for federal and state income tax purposes. This means that Annex Brands' taxable income or loss is included in the shareholders' personal federal and state income tax returns. Consequently, Annex Brands does not record a federal tax provision in its consolidated financial statements.
However, for state income tax purposes, Annex Brands is subject to certain minimum franchise taxes in the states where it files its income tax returns. These minimum franchise taxes are the only state income taxes Annex Brands itself pays, as the majority of income tax responsibilities pass through to its shareholders.
Annex Brands' management believes that the company has not taken any significant uncertain tax positions. Furthermore, the company is no longer subject to income tax examinations for fiscal years prior to 2020 for state purposes and fiscal years prior to 2021 for federal purposes. This indicates that Annex Brands has maintained compliance with tax regulations and has closed previous tax years with the relevant authorities.