Is Bevaris Alliance allowed a net operating loss carryover or carryback as a deduction?
Bevaris_Alliance Franchise · 2024 FDDAnswer from 2024 FDD Document
Income taxes. Federal income taxes are not payable by, or provided for, the Company. The member is taxed individually on their share of Company earnings. The Company has elected to be treated as a corporation and taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, the Company does not pay federal corporate income taxes on its taxable income and is not allowed a net operating loss carryover or carryback as a deduction. Instead, the member includes their respective share of the Company's net income or loss in their individual income tax returns. Although the State of California follows Subchapter S of the Internal Revenue Code with respect to taxation of individuals on Company earnings, it also imposes a minimum tax of 1.5% on Company earnings.
Source: Item 23 — RECEIPT (FDD pages 22–88)
What This Means (2024 FDD)
According to the 2024 FDD, Bevaris Alliance Franchise System, LLC has elected to be treated as a corporation and taxed under the provisions of Subchapter S of the Internal Revenue Code. Because of this election, the company does not pay federal corporate income taxes on its taxable income.
As a result of this tax structure, Bevaris Alliance is not allowed a net operating loss carryover or carryback as a deduction. Instead, the member includes their respective share of the company's net income or loss in their individual income tax returns.
While the State of California follows Subchapter S of the Internal Revenue Code with respect to taxation of individuals on company earnings, it also imposes a minimum tax of 1.5% on company earnings. This means that while federal income taxes are passed through to the members, California still taxes the company at a minimum rate.