What were the distributions for B Bops at December 31, 2024?
B_Bops Franchise · 2025 FDDAnswer from 2025 FDD Document
of lowa.
In response to House File 352 the Company has elected to pay a newly imposed Iowa Pass-Through Entity Tax ("PTET") on behalf of the shareholder. This tax is assessed as 6.04% of the Company's Iowa-source S Corporation distributive items and is applied to reduce the shareholder's proportionate share of federal taxable income reportable on their personal income tax return. Accordingly, the shareholder recognizes a federal income tax benefit as if the shareholder's state income tax was fully deductible on the shareholder's personal federal income tax return. Since the income tax benefits associated with the PTET exclusively benefit the shareholder, the tax is recognized as a distribution to that shareholder. The shareholder's distributions include $7,596 representing that shareholder's share of the PTET paid on their behalf for the year ended December 31, 2024.
Note 2 Related Party Transactions
B-Bop's Franchising Corp.
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 52–53)
What This Means (2025 FDD)
According to B Bops's 2025 Franchise Disclosure Document, the distributions at December 31, 2024, included a payment related to Iowa Pass-Through Entity Tax (PTET). The shareholder's distributions include $7,596, which represents the shareholder's share of the PTET paid on their behalf for the year ended December 31, 2024. This tax payment is considered a distribution because the income tax benefits associated with the PTET exclusively benefit the shareholder. The tax is assessed at 6.04% of the company's Iowa-source S Corporation distributive items.
This means that B Bops elected to pay the Iowa PTET on behalf of its shareholder, which reduced the shareholder's federal taxable income. The $7,596 distribution effectively covers the shareholder's tax obligations, providing them with a federal income tax benefit as if their state income tax was fully deductible on their federal income tax return. This arrangement is treated as a distribution to the shareholder because the tax benefits do not accrue to the company itself but directly to the shareholder.
Additionally, the Statements of Stockholder's Equity indicate a distribution of ($7,596) for the year. This distribution is factored into the calculation of the balance at December 31, 2024, which is reported as $794,733. Understanding these distributions is important for prospective franchisees as it provides insight into how B Bops manages its financial obligations and shareholder benefits, which can reflect on the overall financial health and stability of the company.