What was the valuation allowance for Del Taco's deferred tax assets in 2023?
Del_Taco Franchise · 2025 FDDAnswer from 2025 FDD Document
,111 | 28.5 % |
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at each fiscal year-end are presented below (in thousands):
| 2024 | 2023 | ||
|---|---|---|---|
| Deferred tax assets: | |||
| Operating and finance lease liabilities | $ 381,52 | 22 | $ 372,095 |
| Accrued defined benefit pension and postretirement benefits | 22,0 | 74 | 18,896 |
| Deferred income | 15,4 | 65 | 15,137 |
| Accrued legal settlements | 4,7 | 64 | 11,099 |
| Accrued insurance | 35 | 8,086 | |
| Share-based compensation | 6,8 | 14 | 6,139 |
| Accrued incentive compensation | 2,69 | 92 | 5,928 |
| Capitalized research costs | 1,4 | 43 | 1,943 |
| Tax loss and tax credit carryforwards | 3 | 87 | 1,956 |
| Accrued compensation expense | 1,2: | 54 | 1,259 |
| Other reserves and allowances | 1,24 | 41 | 1,144 |
| Property and equipment, net of impairment | 5,8 | 47 | 181 |
| Other, net | 4,20 | 01 | 3,852 |
| Total gross deferred tax assets | 454,83 | 39 | 447,715 |
| Valuation allowance | - | (1,043) | |
| Total net deferred tax assets | 454,83 | 39 | 446,672 |
| Deferred tax liabilities: | |||
| Operating and finance lease ROU assets | (378,5 | 31) | (380,040) |
| Intangible assets | (88,3 | 78) | (84,969) |
| I |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 58)
What This Means (2025 FDD)
According to Del Taco's 2025 Franchise Disclosure Document, the valuation allowance for deferred tax assets in 2023 was $1,043. This means that Del Taco reduced the carrying value of its deferred tax assets by this amount, as it was determined that a portion of these assets might not be realized in the future. Deferred tax assets arise when a company has overpaid taxes or has tax benefits that can be used to reduce future tax obligations. However, if it is uncertain whether these benefits will be realized, a valuation allowance is established to reflect this uncertainty.
For a prospective Del Taco franchisee, this information provides insight into the company's financial health and its approach to tax management. A valuation allowance suggests that Del Taco has some level of uncertainty regarding its ability to utilize all of its deferred tax assets. This could be due to various factors, such as projected future earnings, changes in tax laws, or other economic conditions.
It is important to note that a valuation allowance does not necessarily indicate financial instability. It is a common accounting practice to ensure that assets are not overstated on the balance sheet. However, franchisees may want to inquire about the specific reasons for the valuation allowance and how Del Taco plans to manage its deferred tax assets in the future. Understanding these factors can help franchisees assess the overall financial risk and potential tax implications associated with investing in a Del Taco franchise.