What happens if Face Foundrie takes an uncertain tax position?
Face_Foundrie Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company is structured as a limited liability company ("LLC") under the laws of the state of Minnesota. Accordingly, the income or loss of the Company will be included in the income tax returns of the members. Therefore, there is no provision for federal and state income taxes.
The Company follows the guidance under ASC 740, Accounting for Uncertainty in Income Taxes. ASC 740 prescribes a more-likely-than-not measurement methodology to reflect the financial statement impact of uncertain tax positions taken or expected to be taken in the tax return. If taxing authorities were to disallow any tax positions taken by the Company, the additional income taxes, if any, would be imposed on the member rather than the Company. Accordingly, there would be no effect on the Company's financial statements.
The Company's income tax returns are subject to examination by taxing authorities for a period of three years from the date they are filed. As of December 31, 2024, the 2023, 2022 and 2021 tax years were subject to examination.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 73)
What This Means (2025 FDD)
According to Face Foundrie's 2025 Franchise Disclosure Document, because Face Foundrie is structured as a limited liability company (LLC) in Minnesota, its income or loss is included in the income tax returns of its members. Therefore, Face Foundrie does not have a provision for federal and state income taxes. Face Foundrie follows ASC 740, Accounting for Uncertainty in Income Taxes, which uses a more-likely-than-not measurement methodology to reflect the financial statement impact of uncertain tax positions.
If taxing authorities disallow any tax positions taken by Face Foundrie, any additional income taxes would be imposed on the member rather than the company. Consequently, this would not affect Face Foundrie's financial statements.
Face Foundrie's income tax returns are subject to examination by taxing authorities for three years from the filing date. As of December 31, 2024, the 2023, 2022, and 2021 tax years were subject to examination.