Under which subchapter of the Internal Revenue Code is Bevaris Alliance taxed?

According to Bevaris Alliance's 2024 Franchise Disclosure Document, the company has elected to be treated as a corporation and taxed under Subchapter S of the Internal Revenue Code. As a result, Bevaris Alliance itself 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.

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 the profits and losses of Bevaris Alliance pass through to its member's individual tax returns at the federal level, the company itself is still subject to a minimum tax in California.

For a prospective franchisee, this information is relevant because it provides insight into how Bevaris Alliance handles its income taxes. Understanding the tax structure of the franchisor can be helpful for franchisees as they plan their own business and financial strategies. It's important to note that this information pertains to the franchisor's tax obligations and not the franchisee's, who will have their own set of tax considerations.