As of January 1, 2024, what was the value of Checkers' business interest limitation carryforward?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
mporary differences that give rise to significant portions of the deferred income tax assets and liabilities recognized within "deferred income tax liabilities" in the accompanying consolidated balance sheets as of December 30, 2024 (Successor) and January 1, 2024 (Successor) were as follows:
| For the Year Ended December 30, 2024 (Successor) | For the Period Ended January 1, 2024 (Successor) | |
|---|---|---|
| Deferred tax assets | ||
| Net operating loss carryforwards | $ 58 | $ - |
| Business interest limitation carryforward | 24,472 | 21,518 |
| Accruals | 2,184 | 2,211 |
| Operating ROU assets | 36,262 | 39,355 |
| Difference between book and tax basis of property and equipment | 3,183 | 9,423 |
| Allowance for credit losses | 163 | 69 |
| Stock-based compensation | - | 32 |
| Deferred revenue and other | 2,291 | 2,507 |
| Deferred tax assets | 68,613 | 75,115 |
| Less: valuation allowance | (10,188) | (38,288) |
| Net deferred tax assets | 58,425 | 36,827 |
| Deferred tax liabilities | ||
| Difference between book and tax basis of brands intangible assets | (49,122) | ( |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 91)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, the company's business interest limitation carryforward as of January 1, 2024, was $21,518. This figure represents a deferred tax asset, which arises because the company has incurred business interest expenses that exceed the amount deductible for tax purposes in prior years. The carryforward allows Checkers to deduct these excess interest expenses in future years, subject to certain limitations.
For a prospective Checkers franchisee, understanding deferred tax assets and carryforwards is important for assessing the overall financial health and tax position of the company. A significant business interest limitation carryforward suggests that Checkers has faced limitations on deducting interest expenses in the past, potentially due to profitability or tax law changes. However, it also presents an opportunity for future tax savings, which could improve the company's financial performance.
It's important to note that the actual value of the carryforward depends on Checkers' future profitability and applicable tax laws. Changes in tax regulations or the company's financial performance could affect the amount and timing of the deductions that can be claimed. Franchisees should consult with their own financial advisors to understand the implications of Checkers' deferred tax assets and how they might impact the company's long-term financial stability.