What is the process Bumble Roofing uses to evaluate federal and state income tax positions?
Bumble_Roofing Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company is a wholly owned subsidiary of Empower Brands Franchising, LLC ("Empower"). Empower is a wholly owned subsidiary of MidOcean BCAT Holdings, Inc. ("BCAT").
Accordingly, the Company's income or loss is presented without a provision or credit for federal and state income taxes. The Company's income or loss is allocated to Empower in accordance with the operating agreement. The Company annually evaluates all federal and state income tax positions. This process includes an analysis of whether these income tax positions the Company takes meet the definition of an uncertain tax position under the Income Taxes Topic of the Financial Accounting Standards Codification. In general, the Company is no longer subject to tax examinations for the tax years ending before September 30, 2021. See Note 10 for details on the Company's change in accounting policy for allocating BCAT's provision or credit for income taxes.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 53)
What This Means (2025 FDD)
According to Bumble Roofing's 2025 Franchise Disclosure Document, the company itself does not directly handle federal and state income taxes. Instead, as a wholly-owned subsidiary of Empower Brands Franchising, LLC, which in turn is a wholly-owned subsidiary of MidOcean BCAT Holdings, Inc. ("BCAT"), Bumble Roofing's income or loss is allocated to Empower in accordance with their operating agreement.
Bumble Roofing annually evaluates all federal and state income tax positions. This evaluation includes analyzing whether the company's income tax positions meet the definition of an uncertain tax position under the Income Taxes Topic of the Financial Accounting Standards Codification. This means Bumble Roofing assesses if its tax positions are likely to be upheld if challenged by tax authorities.
The FDD states that Bumble Roofing is generally no longer subject to tax examinations for tax years ending before September 30, 2021. This provides a level of certainty regarding past tax filings. Note 10 in the FDD provides further details on the company's change in accounting policy for allocating BCAT's provision or credit for income taxes, which may be relevant for understanding the historical tax treatment.