What comprises the current tax expenses for Best Brains for the year presented in the financial statements?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
Current tax expenses for the year presented are comprised of the minimum tax for the federal and the States in which the corporation operates based on minimal tax rates for taxable income.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The corporation has temporary differences that are immaterial. Thus, the corporation determines it is impractical to recognize such in the financial statements.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, the current tax expenses for the presented year consist of the minimum tax for the federal government and the states in which the corporation operates. These taxes are based on minimal tax rates for taxable income.
Best Brains has elected to be taxed under Chapter C of the Internal Revenue Code, meaning the corporation's income is reported in its income tax return. As of December 31, 2024, Best Brains did not have any tax benefits disallowed under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) FASB ASC 740, Income Taxes, and no amounts have been recognized for potential interests and penalties.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. However, the corporation has determined that these temporary differences are immaterial, making it impractical to recognize them in the financial statements. This approach aligns with standard accounting practices, where only material items are typically reported to ensure financial statements remain clear and concise.