How does Benjamin Franklin Plumbing provide for income taxes?
Benjamin_Franklin_Plumbing Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company is subject to federal and state income taxes. Accordingly, an income tax provision has been recognized for federal and state income taxes. AB Canada and Homewatch Canada are Canadian corporations that are subject to Canadian income taxes. For 2024, 2023 and 2022, income taxes for AB Canada and Homewatch Canada were insignificant.
The Company provides for income taxes in accordance with the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities for financial reporting and for income tax reporting. The deferred tax assets or liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
For balance sheet presentation purposes, the Company nets its deferred tax asset and deferred tax liability positions by tax jurisdiction and classifies the resulting net deferred tax asset and/or net deferred tax liability as noncurrent in accordance with ASU 2015-17, Income Taxes (Topic 740) Balance Sheet Classification of Deferred Taxes on the consolidated balance sheets.
The Company utilizes a two-step approach for recognizing and measuring uncertain tax positions accounted for in accordance with the asset and liability method. The first step is to evaluate the tax position for recognition by determining wh
Source: Item 22 — CONTRACTS (FDD pages 87–88)
What This Means (2025 FDD)
According to the 2025 FDD, Benjamin Franklin Plumbing, as a company, is subject to federal and state income taxes, and an income tax provision is recognized for these taxes. AB Canada and Homewatch Canada, which appear to be related entities, are subject to Canadian income taxes, although these were insignificant for 2022, 2023, and 2024.
Benjamin Franklin Plumbing uses the asset and liability method for income taxes. This involves recognizing deferred tax assets and liabilities for future tax consequences related to differences between the carrying amounts of assets and liabilities for financial reporting and income tax reporting. These deferred tax assets or liabilities represent the future tax return consequences of these differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled.
Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. For balance sheet presentation, Benjamin Franklin Plumbing nets its deferred tax asset and deferred tax liability positions by tax jurisdiction and classifies the resulting net deferred tax asset and/or net deferred tax liability as noncurrent. The company also uses a two-step approach for recognizing and measuring uncertain tax positions.