How is Basecamp Fitness treated for income tax purposes by Purpose Brands Holdings LLC?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company is treated as a single member limited liability company (LLC) that is treated as a disregarded entity for tax purposes. As such, the Company's income, losses, and credits are included in the income tax returns of Purpose Brands Holdings LLC.
The Company has evaluated its tax positions and related income tax under the Financial Accounting Standards Board's (FASB) authoritative guidance Accounting for Income Taxes. Management believes that since the Company is taxed as an LLC, there is not a significant impact on the Company as a result of implementing this standard. Therefore, no provision or liability for federal or state income taxes has been included in these financial statements. A provision has been made, however, for state minimum fees and other state taxes which are applicable to all entities.
The Company recognizes the effect of uncertain income tax positions only if those positions are more likely than not of being sustained. The Company is not currently under examination by any taxing jurisdiction and management believes there are no uncertain income tax positions taken which would require the Company to reflect a liability for unrecognized tax positions. The periods subject to examination are tax years subsequent to 2020. In the event of any future penalties or interest, the Company has elected to record interest and penalties as income tax expense on the Company's consolidated statements of comprehensive income. The
Source: Item 23 — RECEIPTS (FDD pages 62–248)
What This Means (2025 FDD)
According to the 2025 FDD, Basecamp Fitness, LLC is treated as a single-member limited liability company (LLC) and is considered a disregarded entity for tax purposes. This means that Basecamp Fitness itself does not pay income taxes directly. Instead, its income, losses, and credits are included in the income tax returns of its parent company, Purpose Brands Holdings LLC.
This arrangement has implications for the financial statements of Basecamp Fitness. Because it's taxed as an LLC, the company does not include a provision or liability for federal or state income taxes in its financial statements. However, it does account for state minimum fees and other state taxes applicable to all entities. This is a fairly common practice for single-member LLCs, as the tax burden ultimately falls on the parent company.
Basecamp Fitness evaluates its tax positions according to the Financial Accounting Standards Board's (FASB) guidance on Accounting for Income Taxes. The company only recognizes the effect of uncertain income tax positions if they are more likely than not to be sustained. As of the issuance of the FDD, Basecamp Fitness is not under examination by any taxing jurisdiction, and management believes there are no uncertain tax positions that would require a liability for unrecognized tax positions. The periods subject to examination are tax years subsequent to 2020. Any future penalties or interest would be recorded as income tax expense on the company's statements of income.