Is Bor Restoration subject to income taxes?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company is a single member limited liability company and has elected to be treated as a pass-through entity for income tax purposes and, as such, is not subject to income taxes. Rather, all items of taxable income, deductions and tax credits are passed through to and are reported by its owner on the respective income tax returns. Accordingly, the Company is not required to take any tax positions in order to qualify as a pass-through entity. The Company is required to file and does file tax returns with the Internal Revenue Service and other taxing authorities. Accordingly, these financial statements do not reflect a provision for income taxes and the Company has not taken other tax positions which must be considered for disclosure.
The Company is no longer subject to U.S. federal tax audits on its Form 1040 by taxing authorities for years ending prior to December 31, 2020. The Company is no longer subject to state tax audits on its Form 104 state tax return by taxing authorities for years ending prior to December 31, 2019. The years subsequent to this year contain matters that could be subject to differing interpretations of applicable tax laws and regulations. Although the outcome of tax audits is uncertain, the Company believes no issues would arise.
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to the 2024 FDD, Bor Restoration, legally known as BOR Franchising, LLC, is structured as a single-member limited liability company (LLC) and has elected to be treated as a pass-through entity for income tax purposes. This means that Bor Restoration itself is not directly subject to income taxes. Instead, the company's taxable income, deductions, and tax credits are passed through to its owner, who then reports these items on their individual income tax returns.
As a pass-through entity, Bor Restoration is not required to take any specific tax positions to maintain this status. The company is still obligated to file tax returns with the Internal Revenue Service (IRS) and other relevant taxing authorities. Because of its pass-through status, the financial statements of Bor Restoration do not include a provision for income taxes, and the company has not taken any other tax positions that would require disclosure in its financial statements.
The FDD indicates that Bor Restoration is no longer subject to U.S. federal tax audits for tax years ending before December 31, 2020, or state tax audits for years ending before December 31, 2019. However, tax years after these dates may still be subject to differing interpretations of tax laws and regulations. While the outcomes of potential tax audits are uncertain, Bor Restoration believes that no significant issues would arise from such audits.