What was the income tax expense at the statutory rate for Carls in fiscal year 2022?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
pectively.
The management advisory and consulting services agreement also provides that Roark may earn future fees in connection with certain business acquisition transactions, an initial public offering or a change of control transaction. The management advisory and consulting services agreement includes customary exculpation and indemnification provisions in favor of Roark and its affiliates.
NOTE 20 — INCOME TAXES
Income tax expense consisted of the following:
| Fise | cal 2023 | Fig | scal 2022 | |
|---|---|---|---|---|
| Current: | ||||
| Federal | $ | 3,424 | $ | 3,828 |
| State | 858 | 1,027 | ||
| For |
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the income tax expense at the statutory rate for fiscal year 2022 was $7,005. This figure represents the amount of income tax expense calculated using the federal statutory rate of 21.0%, before considering other factors that may increase or decrease the total income tax expense.
It is important to note that this is not the total income tax expense for Carls. The total income tax expense includes other items such as state income taxes, nondeductible share-based compensation, general business credits, nondeductible foreign losses, uncertain tax positions, intercompany interest, foreign derived intangible income deduction, and other net adjustments. These items can significantly impact the final income tax expense reported by Carls.
Prospective franchisees should understand that while the statutory rate provides a baseline, the actual tax obligations of Carls can vary due to these additional factors. Reviewing the reconciliation of income tax expense, as presented in the FDD, offers valuable insight into the various components that affect the overall tax burden of the company. Understanding these components can help franchisees better assess the financial health and tax strategies of Carls.