Has Bor Restoration taken other tax positions which must be considered for disclosure?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
ease expense is recognized on a straight-line basis over the lease term. The Company does not report ROU assets and lease liabilities for its short-term leases (leases with a term of 12 months or less). Instead, the lease payments of those leases are reported as lease expense on a straight-line basis over the lease term.
Subsequent Events
The Company has performed an evaluation of subsequent events through March 26, 2024, which is the date the financial statements were available to be issued, and has considered any relevant matters in the preparation of the financial statements and footnotes.
(3) Income Taxes
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.
Source: Item 23 — Receipts (FDD pages 40–202)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, as a single-member limited liability company, Bor Restoration has elected to be treated as a pass-through entity for income tax purposes. This means that Bor Restoration itself is not subject to income taxes. Instead, all taxable income, deductions, and tax credits are passed through to and reported by its owner on their individual income tax returns.
Because of this pass-through status, Bor Restoration is not required to take any specific tax positions to maintain its status. The company does file tax returns with the IRS and other taxing authorities as required. The financial statements provided in the FDD do not include a provision for income taxes, and Bor Restoration confirms that it has not taken any other tax positions that would need to be disclosed.
For a prospective Bor Restoration franchisee, this information indicates that the franchisor's tax structure is straightforward. The franchisor is not subject to federal tax audits for years ending before December 31, 2019, and state tax audits for years ending before December 31, 2018. Tax years after these dates may have differing interpretations of tax laws, but Bor Restoration believes no issues would arise.