What is the Illinois Pass-Through Entity (
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | 2022 | ||
|---|---|---|---|---|
| Royalty | $ | 115,268 | $ 120,986 | $ 115,531 |
| receivable–contract revenue | ||||
| Deferred revenue | $ | 25,000 | $ 25,000 | $ 37,500 |
| (for recognition | ||||
| the following year): | ||||
| Initial franchise fees |
1. Summary of Significant Accounting Policies (cont'd)
Income Taxes – The Company elected to pay Illinois Pass-Through Entity ("PTE") Tax ("PTE Tax") on behalf of the members. This tax is assessed as 4.95% of our business income and is applied to reduce each member's proportionate share of federal taxable income reportable on that member's personal income tax return. Accordingly, each member recognizes a federal income tax benefit as if the member's state income tax were fully deductible on the member's personal federal income tax return. Since the income tax benefits associated with the PTE Tax exclusively benefit the members, each member's proportionate share of the tax is recognized as a distribution to that member. Each of the member's distributions include $30,856 and $39,863 representing t
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, the company has elected to pay the Illinois Pass-Through Entity ("PTE") Tax on behalf of its members. This tax is calculated as 4.95% of the company's business income. The PTE tax payment reduces each member's share of federal taxable income that they must report on their personal income tax return.
Because Beggars Pizza pays the PTE tax, each member effectively receives a federal income tax benefit, as if their state income tax payments were fully deductible on their federal income tax return. The FDD states that the income tax benefits associated with the PTE Tax exclusively benefit the members. Therefore, each member's proportionate share of the tax is recognized as a distribution to that member.
For the year ending December 31, 2024, each member's distributions include $30,856 representing that member's share of the PTE Tax paid on their behalf. For the year ending December 31, 2023, each member's distributions include $39,863 representing that member's share of the PTE Tax paid on their behalf. This means that the members of Beggars Pizza Franchise, LLC, received these amounts as part of their distributions to offset their tax liabilities.