Who is taxed on the income for federal income tax purposes for Coffee News?

According to Coffee News's 2025 Franchise Disclosure Document, Coffee News USA, Inc. operates as an S corporation. As such, the company itself is not directly subject to federal income tax. Instead, the income generated by Coffee News is taxed at the shareholder level. This means the individual or entities that hold shares in Coffee News USA, Inc. are responsible for reporting and paying income taxes on their portion of the company's earnings.

This structure is common for smaller businesses and franchises as it allows profits and losses to be passed through directly to the owners' personal income without being subject to corporate tax rates. The shareholders will include their share of the Coffee News income on their individual tax returns, paying taxes at their applicable individual income tax rates.

It's important to note that while the company itself doesn't pay federal income taxes, it still has obligations to file tax returns and report its financial activities to the IRS. Additionally, the FDD mentions that the federal and state returns for 2024, 2023, and 2022 are subject to examination by the IRS, generally for three years after they were filed. This highlights the importance of maintaining accurate financial records and complying with all tax regulations.