What was the total amount of Checkers' deferred tax assets, before valuation allowance, as of January 1, 2024?
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 total deferred tax assets before valuation allowance was $75,115 as of January 1, 2024. This figure represents the sum of various components, including net operating loss carryforwards, business interest limitation carryforward, accruals, operating ROU assets, the difference between book and tax basis of property and equipment, allowance for credit losses, stock-based compensation, and deferred revenue and other items.
Deferred tax assets arise when there are differences between the accounting treatment and the tax treatment of certain items, leading to future tax benefits. These assets are subject to a valuation allowance, which is a reduction in the recognized deferred tax asset to reflect the estimated amount that is not expected to be realized. As of the same date, January 1, 2024, Checkers had a valuation allowance of $38,288, which reduced the net deferred tax assets to $36,827.
For a prospective Checkers franchisee, understanding deferred tax assets and valuation allowances is crucial for assessing the company's financial health and future tax obligations. The deferred tax assets can potentially reduce future tax liabilities, while the valuation allowance indicates the company's assessment of the realizability of these assets. Reviewing these figures in the context of Checkers' overall financial statements can provide valuable insights into the company's tax position and its potential impact on future profitability.