How is Buildingstars taxed under the Internal Revenue Code?

According to Buildingstars' 2025 Franchise Disclosure Document, Buildingstars International, Inc. has elected to be taxed as an S Corporation under the provisions of the Internal Revenue Code. As a result, the company's income is taxable to the stockholder of the parent company, Facility Brands, Inc. Therefore, no provision for income taxes has been made in the consolidated financial statements.

This means that Buildingstars itself does not pay corporate income taxes. Instead, the profits and losses of Buildingstars are passed through to its parent company's stockholder, who then reports these on their individual income tax return. This structure avoids the double taxation that can occur with C corporations, where the corporation pays taxes on its profits, and then shareholders pay taxes again on dividends they receive.

Buildingstars anticipates making future distributions to the parent company in amounts at least sufficient to cover the taxes on the company's taxable income. This indicates that Buildingstars intends to provide enough funds to Facility Brands, Inc. to cover the tax liabilities incurred due to Buildingstars' profitability. For a prospective franchisee, this information is relevant for understanding the financial structure of the franchisor and how its tax obligations are managed within the larger corporate entity.