What was the total deferred federal income tax for Expense Reduction Analysts?
Expense_Reduction_Analysts Franchise · 2025 FDDAnswer from 2025 FDD Document
---------------------| | Federal | $ | (32,756) | $ | 126,213 | $ 93,457 | | State | | 460 | | | 460 | | Total Income Tax Expense | $ | (32,296) | $ | 126,213 | $ 93,917 |
The income tax provision consisted of the following for the year ended December 31, 2022:
| | | Current | I | Deferred | Total | |--------------------------------|----|-------------------|----|----------|-------------------------| | Federal | $ | 237,935 | $ | (25,851) | $ 212,084 47,830 | | State Total Income Tax Expense | s | 47,830 285,765 | $ | (25,851) | $ 259,914 | The Company's effective income tax rate is higher than what would be expected if the federal statutory rate were applied to
Source: Item 23 — RECEIPTS (FDD pages 58–215)
What This Means (2025 FDD)
According to Expense Reduction Analysts's 2025 Franchise Disclosure Document, the company's deferred federal income tax varied between 2023 and 2024. In 2023, the deferred federal income tax was $126,213, while in 2024, it was ($25,851). These figures reflect the changes in deferred tax assets and liabilities, which arise from temporary differences between the accounting and tax treatment of certain items, such as fixed assets and bad debt allowances.
For a prospective Expense Reduction Analysts franchisee, understanding these deferred tax figures is crucial for assessing the company's financial health and tax planning strategies. Deferred tax assets represent future tax benefits, while deferred tax liabilities indicate future tax obligations. The net impact of these deferred taxes can affect the overall profitability and cash flow of the company.
The FDD also includes additional information regarding income taxes. It states that income taxes consist of taxes currently due plus deferred taxes related primarily to differences between the bases of fixed assets, allowance for bad debts, and certain accrued and related party payables for financial and income tax reporting. It also mentions that deferred taxes are recognized for operating losses that are available to offset future federal income taxes.
It is important to note that the company's effective income tax rate is higher than what would be expected if the federal statutory rate were applied to income before income taxes primarily because of certain expenses deductible for financial reporting purposes that are not tax deductible. A prospective franchisee should consult with a financial advisor to fully understand the implications of these tax matters.