What was the total amount of deferred income tax liabilities for the Carls franchise related to goodwill and other intangible assets in 2022?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Foreign | | (32) (283) | | (28) (371) | | Total income tax expense | $ | 8,865 - | $ | 8,620 | The following is a reconciliation of income tax expense at the federal statutory rate of 21.0% to our income tax expense for fiscal 2023 and 2022, respectively:
| Fis | cal 2023 | Fis | cal 2022 | |
|---|---|---|---|---|
| Income tax expense at statutory rate | $ | 7,691 | $ | 7,005 |
| State income taxes, net of federal income tax effect | 1,281 | 1,651 | ||
| Nondeductible share-based compensation | 163 | 180 | ||
| General business credits | (503) | (445) | ||
| Nondeductible foreign losses | 1,010 | 897 | ||
| Uncertain tax positions | 52 | 365 | ||
| Intercompany interest | 211 | 368 | ||
| Foreign derived intangible income deduction | (1,527) | (1,403) | ||
| Other, net | 487 | 2 | ||
| Total income tax expense | $ | 8,865 | $ | 8,620 |
Deferred income tax liabilities, net consisted of the
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 79–80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the deferred income tax liabilities related to goodwill and other intangible assets in 2022 was $(206,627). This figure represents the tax obligations that Carls has deferred to future periods due to the accounting treatment of goodwill and other intangible assets on its balance sheet. Goodwill typically arises from acquisitions, while intangible assets can include items like trademarks or franchise rights.
For a prospective Carls franchisee, understanding deferred tax liabilities is crucial because it reflects the financial health and tax planning strategies of the company. While deferred tax liabilities are not an immediate cash outflow, they represent future tax obligations that could impact Carls's profitability and, indirectly, the support and services it can provide to its franchisees. A high deferred tax liability might indicate aggressive accounting practices or significant past acquisitions.
It is important to note that deferred tax liabilities can fluctuate from year to year due to changes in tax laws, business acquisitions, or accounting adjustments. Franchisees should monitor these changes to assess the long-term financial stability of Carls. Reviewing these figures in the FDD helps potential franchisees evaluate the financial strategies employed by Carls and their potential implications.