How does Corcoran determine its provision for income taxes?
Corcoran Franchise · 2025 FDDAnswer from 2025 FDD Document
rks is determined using the relief from royalty method which is sensitive to fluctuations in projected revenues.
The Company evaluates the recoverability of its other long-lived assets, including amortizable intangible assets, if circumstances indicate an impairment may have occurred. This assessment is performed by comparing the respective carrying values of the assets to the current and expected future cash flows, on an undiscounted basis, to be generated from such assets. If such assessment indicates that the carrying value of these assets is not recoverable, then the carrying value of such assets is reduced to fair value through a charge to the Company's Consolidated Statements of Operations.
ADVERTISING EXPENSES
Advertising costs are generally expensed in the period incurred. Advertising expenses, recorded within the "Marketing" expense line item on the Company's Consolidated Statements of Operations, were approximately $123 million, $140 million and $175 million for the years ended December 31, 2024, 2023 and 2022, respectively.
INCOME TAXES
The Company's provision for income taxes is determined using the asset and liability method, under which deferred tax assets and liabilities are calculated based upon the differences between the financial statement and income tax bases of assets and liabilities using currently enacted tax rates. These differences are based upon estimated differences between the book and tax basis of the assets and liabilities for the Company. Certain tax assets and liabilities of the Company may be adjusted in connection with the finalization of income tax audits.
The Company's deferred tax assets are recorded net of a valuation allowance when, based on the weight of available evidence, it is more likely than not that all or some portion of the recorded deferred tax balances will not be realized in future periods.
Source: Item 23 — RECEIPTS (FDD pages 75–276)
What This Means (2025 FDD)
According to Corcoran's 2025 Franchise Disclosure Document, the company determines its provision for income taxes using the asset and liability method. This approach calculates deferred tax assets and liabilities based on the differences between the financial statement and income tax bases of assets and liabilities, utilizing currently enacted tax rates. These differences are based upon estimated differences between the book and tax basis of the assets and liabilities for Corcoran. The company's tax assets and liabilities may be adjusted when income tax audits are finalized.
Corcoran records its deferred tax assets net of a valuation allowance. This allowance is applied when it is deemed more likely than not that a portion of the recorded deferred tax balances will not be realized in future periods. Decreases to the valuation allowance are recorded as reductions to the company's provision for income taxes, while increases to the valuation allowance result in additional provision for income taxes.
Furthermore, Corcoran is subject to income taxes in the United States and several foreign jurisdictions, requiring significant judgment in determining the worldwide provision for income taxes and recording related assets and liabilities. The company is regularly under audit by tax authorities, adding uncertainty to the ultimate tax determination. While Corcoran believes there is appropriate support for the positions taken on its tax returns and that the recorded liabilities represent the best estimates of probable loss, the outcomes of tax audits are inherently uncertain.