How does Carls determine the income taxes attributable to CKE Restaurants and its subsidiaries?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
| the period | (4,917) | (6,142) |
|---|---|---|
| New deferrals due to cash received | 4,916 | 4,664 |
| Deferred franchise fees, end of year | $ 35,941 | $ 35,942 |
The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:
| Fiscal: | |
|---|---|
| 2025 | $ 3,454 |
| 2026 | 3,018 |
| 2027 | 2,801 |
| 2028 | 2,665 |
| 2029 | 2,546 |
| Thereafter |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the company is included in the consolidated federal income tax returns and combined state income tax returns of CKE Holding Corporation. To determine the income taxes attributable to CKE Restaurants and its subsidiaries, Carls prepares its income tax provision as if it were a separate taxpayer.
As a result of this approach, Carls makes income tax payments to its corporate parent based on its separate return taxable income. Additionally, Carls makes income tax payments directly to federal, state, local, and foreign taxing jurisdictions.
For the fiscal years 2024 and 2023, Carls's income tax payable to its corporate parent was $13,269 and $13,318, respectively. However, during these fiscal years, Carls did not make any income tax payments to CKE Holding Corporation. Instead, it made income tax payments net of refunds directly to taxing authorities, amounting to $15,426 in 2024 and $11,325 in 2023. This indicates that while the company calculates its tax obligations independently, the actual payments are made directly to the government, with no payments remitted to the parent company during those periods.