What was the income tax expense at the statutory rate for Carls in fiscal year 2023?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
ith 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:
| Fiscal 2024 | Fiscal 2023 | |
|---|---|---|
| Current: | ||
| Federal | $ 11,248 | $ 3,424 |
| State | 3,066 | 858 |
| Foreign | 5,926 | 4,866 |
| 20,240 | 9,148 | |
| Deferred: | ||
| Federal | (4,512) | ( |
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 2023 was $7,691. This figure represents the company's income tax expense calculated using the federal statutory rate of 21.0%, as reconciled in the financial statements.
It's important to note that this is not the total income tax expense for Carls. The document provides a reconciliation of the income tax expense at the statutory rate to the total income tax expense, which includes adjustments for items such as state income taxes, non-deductible share-based compensation, general business credits, non-deductible foreign losses, uncertain tax positions, intercompany interest, foreign-derived intangible income deduction, and other net adjustments. These adjustments can significantly impact the final income tax expense reported by the company.
For fiscal year 2023, after accounting for these adjustments, the total income tax expense for Carls was $8,865. This is higher than the income tax expense at the statutory rate of $7,691, indicating that the net effect of the adjustments increased the company's overall tax liability. A prospective franchisee should understand these adjustments and their potential impact on the company's financial performance.
Understanding the difference between the income tax expense at the statutory rate and the total income tax expense is crucial for assessing Carls's financial health and profitability. Potential franchisees should carefully review the reconciliation provided in the FDD and consult with a financial advisor to fully understand the implications of these tax-related items.