What is Engineering For Kids' approach to tax positions?

According to Engineering For Kids' 2025 Franchise Disclosure Document, the company is treated as a single-member LLC, which has implications for how income taxes are handled. As a disregarded entity for both federal and state income tax purposes, the current period income of Engineering For Kids will be included on the income tax return of its member. This means the company itself does not pay income taxes directly; instead, the income is passed through to its owner, who then reports it on their individual tax return.

Furthermore, any adjustments resulting from IRS examinations would also be reflected on the income tax returns of the stockholders. This indicates that if the IRS audits Engineering For Kids and makes adjustments to its reported income or deductions, these changes would impact the tax liability of the company's owner(s) rather than the company itself. Consequently, the financial statements of Engineering For Kids do not include any provision or liability for current federal income taxes or the effects of IRS examinations on prior years' federal income taxes.

For a prospective Engineering For Kids franchisee, this information is relevant because it provides insight into the tax structure of the franchisor. While it doesn't directly impact the franchisee's tax obligations, understanding how the franchisor handles its taxes can offer a clearer picture of the company's financial operations and stability. Franchisees should consult with their own tax advisors to understand the full tax implications of investing in an Engineering For Kids franchise.