For Benihana, what was the income tax provision at the federal statutory rate in 2023?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
| For the years ended December 31, | |
|---|---|
| 2023 | |
| Income tax provision at federal statutory rate | 21.0% |
| State and local taxes | 26.5% |
| FICA tip credit | (151.2)% |
| Compensation subject to IRC Section 162(m) | 52.3% |
| Equity based compensation | (33.1)% |
| Non-controlling interest | 6.4% |
| Other items, net | 0.4% |
| Effective income tax rate | (77.7)% |
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the income tax provision at the federal statutory rate for the year 2023 was 21.0%. This figure represents the theoretical tax expense calculated using the federal corporate tax rate, before considering any adjustments or credits.
It's important to note that the effective income tax rate for Benihana in 2023 was (77.7)%, which is significantly different from the federal statutory rate. This discrepancy arises due to various factors, including state and local taxes, FICA tip credits, compensation subject to IRC Section 162(m), equity-based compensation, non-controlling interest, and other items. These elements collectively influence the actual tax liability of Benihana.
For a prospective franchisee, understanding the difference between the statutory and effective tax rates is crucial. While the statutory rate provides a baseline, the effective rate reflects the actual tax burden on the company's income. Franchisees should be aware of the various factors that can impact the effective tax rate and how these might affect Benihana's financial performance. Reviewing these figures in the FDD can provide insight into the tax-related aspects of Benihana's financial operations.