How is Big Blue Swim School treated for federal and state income tax purposes?
Big_Blue_Swim_School Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company is treated as a partnership for tax purposes and, as such, is not liable for federal or state income taxes. As a single-member limited liability company and therefore a disregarded entity for income tax purposes, the Company's assets and liabilities are combined with and included in the income tax return of the Parent. Accordingly, the accompanying financial statements do not include a provision or liability for federal or state income taxes.
The Company recognizes and measures its unrecognized tax benefits in accordance with FASB Accounting Standards Codification (''ASC'') 740, Income Taxes. Under that guidance, management assesses the likelihood that tax positions will be sustained upon examination based on the facts, circumstances and information, including the technical merits of those positions, available at the end of each period. The measurement of unrecognized tax benefits is adjusted when new information is available or when an event occurs that requires a change. There were no uncertain tax positions at December 31, 2024 and 2023.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to the 2025 FDD, Big Blue Swim School Franchising, LLC is treated as a partnership for tax purposes. As such, Big Blue Swim School is not liable for federal or state income taxes. As a single-member limited liability company and therefore a disregarded entity for income tax purposes, the company's assets and liabilities are combined with and included in the income tax return of its parent company.
Because of this tax structure, the financial statements for Big Blue Swim School Franchising, LLC do not include any provision or liability for federal or state income taxes. This means that any tax obligations related to the franchise operations are handled at the parent company level rather than at the franchise level.
Big Blue Swim School recognizes and measures its unrecognized tax benefits in accordance with FASB Accounting Standards Codification (''ASC'') 740, Income Taxes. Management assesses the likelihood that tax positions will be sustained upon examination based on available information. The measurement of unrecognized tax benefits is adjusted when new information is available or when an event occurs that requires a change. As of December 31, 2024 and 2023, there were no uncertain tax positions.