What accounting guidance does Burneys Sweets More follow for uncertainty in income taxes?
Burneys_Sweets_More Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company follows the generally accepted accounting guidance for uncertainty in income taxes, which prescribes when to recognize and how to measure the financial statement effects, if any, of income tax positions taken or expected to be taken on its income tax returns, including the position that the Company continues to qualify to be treated as an S Corporation for both federal and state income tax purposes. This guidance requires management to evaluate the likelihood that, upon examination by relevant taxing authorities, those income tax positions would be sustained.
Based on that evaluation, if it were more than 50% likely that a material amount of income tax would be imposed at the Company level upon examination by the relevant taxing authorities, a liability would be recognized in the accompanying balance sheet along with any interest and penalties that would result from that assessment. Should any such penalties and interest be incurred, the Company's policy would be to recognize them as operating expenses.
DMG BURNEY, INC.
Based on management's evaluation at December 31, 2024 and 2023, the Company had no such liabilities resulting from uncertain tax positions. Years open for examination are December 31, 2022, 2023, and 2024.
Source: Item 23 — RECEIPT (FDD pages 50–199)
What This Means (2025 FDD)
According to Burneys Sweets More's 2025 Franchise Disclosure Document, the company adheres to generally accepted accounting guidance for uncertainty in income taxes. This accounting guidance dictates when to recognize and how to measure the financial statement effects of income tax positions taken or expected to be taken on income tax returns. This includes the position that the company continues to qualify to be treated as an S Corporation for both federal and state income tax purposes.
Specifically, Burneys Sweets More's management must evaluate the likelihood that their income tax positions would be sustained upon examination by relevant taxing authorities. If it is more than 50% likely that a material amount of income tax would be imposed at the company level after an examination, a liability would be recognized on the balance sheet. This liability would also include any interest and penalties resulting from that assessment. The company's policy is to recognize any such penalties and interest as operating expenses.
Based on management's evaluation at December 31, 2024, and 2023, DMG Burney, Inc. had no liabilities resulting from uncertain tax positions. The years open for examination are December 31, 2022, 2023, and 2024. This means that for those years, the company believes its tax positions are likely to be sustained if audited.