What was the total deferred federal income tax for Benihana in 2020?

According to Benihana's 2024 Franchise Disclosure Document, the company's deferred federal income tax for the year ending December 31, 2020, was a benefit of $(4,593). This means that Benihana had a reduction in income tax expense due to temporary differences between the book value of assets and liabilities and their tax bases, as well as from carryforwards.

Deferred tax assets and liabilities arise from timing differences between when items are recognized for financial accounting purposes and when they are recognized for tax purposes. These differences can result from items such as depreciation methods, net operating losses, and other temporary differences. A deferred tax asset represents a future tax benefit, while a deferred tax liability represents a future tax obligation.

The total deferred tax is the sum of the federal, state and local, and foreign deferred taxes. For 2020, the total deferred tax was a benefit of $(5,475). This figure is the sum of the federal deferred tax benefit of $(4,593), the state and local deferred tax benefit of $(887), and the foreign deferred tax expense of $5.

Prospective franchisees should understand how deferred taxes can impact a company's financial position and profitability. While deferred tax assets can be a source of future tax benefits, their realization depends on the company's ability to generate sufficient taxable income in the future. A valuation allowance may be established to reduce deferred tax assets to the amount that is more likely than not to be realized.