What was the effective income tax rate for Benihana for the year ended December 31, 2022?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
| For the years ended December 31, | ||
|---|---|---|
| 2023 | 2022 | |
| Income tax provision at federal statutory rate | 21.0% | 21.0% |
| State and local taxes | 26.5% | 7.6% |
| FICA tip credit | (151.2)% | (22.5)% |
| Compensation subject to IRC Section 162(m) | 52.3% | 8.6% |
| Equity based compensation | (33.1)% | (9.3)% |
| Non-controlling interest | 6.4% | —% |
| Other items, net | 0.4% | 0.8% |
| Effective income tax rate | (77.7)% | 6.2% |
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the effective income tax rate for the year ended December 31, 2022, was 6.2%. This rate is the actual percentage of income that Benihana paid in income taxes after taking into account various deductions and credits.
The FDD also provides a breakdown of factors contributing to the effective tax rate. For the year 2022, these included an income tax provision at the federal statutory rate of 21.0%, state and local taxes of 7.6%, and a FICA tip credit of (22.5)%. Other factors included compensation subject to IRC Section 162(m) at 8.6%, equity-based compensation at (9.3)%, and other net items at 0.8%.
It's important to note that the effective income tax rate can fluctuate from year to year due to changes in tax laws, business operations, and various tax credits and incentives utilized by Benihana. For instance, the effective income tax rate for the year ended December 31, 2023, was (77.7)%, which is significantly different from the 6.2% in 2022. These fluctuations highlight the complexities of corporate taxation and the impact of specific financial strategies on a company's tax obligations.