How does Chicken Guy handle uncertain tax positions in its financial statements?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company was formed as a limited liability company and is treated as a pass-through entity for federal income tax purposes. The Company's member includes the Company's income or loss in its individual income tax return. Accordingly, no provisions or liabilities for federal and state income taxes have been included in the accompanying financial statements.
The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheets. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company's open tax years subject to examination by the Internal Revenue Service generally remain open for three years from the date of filing.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, because Chicken Guy is a limited liability company treated as a pass-through entity for federal income tax purposes, its member includes the company's income or loss on their individual income tax return. Therefore, Chicken Guy does not include provisions or liabilities for federal and state income taxes in its financial statements.
Chicken Guy identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. These positions are considered unrecognized tax benefits, and a corresponding liability is established on the balance sheets. As of the date of the financial statements, Chicken Guy has not recognized a liability for uncertain tax positions.
If there were an unrecognized tax benefit, Chicken Guy would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The company's open tax years subject to examination by the Internal Revenue Service generally remain open for three years from the date of filing. This means that for a period of three years after Chicken Guy files its tax returns, the IRS can review those filings.