What was the net deferred income tax liabilities for Hardees in 2024?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
| \$ 11,248 |
| State | 2,449 | 3,066 | | Foreign | 6,404 | 5,926 | | | 16,135 | 20,240 | | Deferred: | | | | Federal | (8,988) | (4,512) | | State | (2,857) | 714 | | Foreign | (24) | 60 | | | (11,869) | (3,738) | | Total income tax expense | $ 4,266 | $ 16,502 |
The following is a reconciliation of income tax expense at the federal statutory rate of 21.0% to our income tax expense for fiscal 2025 and 2024, respectively:
| Income tax expense at statutory rate | $ | 5,262 | $ 12,942 |
|---|---|---|---|
| State income taxes, net of federal income tax effect | (322) | 2,986 | |
| Nondeductible share-based compensation | 93 | 446 | |
| General business credits | (379) | (640) | |
| Nondeductible foreign losses | 2,010 | 230 | |
| Uncertain tax positions | (383) | 591 | |
| Foreign derived intangible income deduction | (1,975) | (2,003) | |
| Other, net | (40) | 1,950 | |
| Total income tax expense | $ | 4,266 | $ 16,502 |
Deferred income tax liabilities, net consisted of the following at January 31, 2025 and 2024:
| | 2025
Source: Item 21 — Financial Statements (FDD pages 84–85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, the net deferred income tax liabilities for 2024 was a negative value. Specifically, the deferred income tax liabilities, net was $$(171,393). This figure represents the net effect of deferred tax liabilities and deferred tax assets.
Deferred tax liabilities generally arise from temporary differences between the book value of an asset or liability and its tax basis. These differences result in taxable amounts in future years when the asset is recovered or the liability is settled. Common examples include depreciation methods, where accelerated depreciation for tax purposes can create a deferred tax liability. Deferred tax assets, on the other hand, arise from temporary differences that create deductible amounts in the future. Net operating losses (NOLs) and tax credit carryforwards are common sources of deferred tax assets.
The fact that the net deferred income tax liabilities is negative indicates that Hardees had more deferred tax assets than liabilities in 2024. This could be due to a variety of factors, such as significant NOL carryforwards or tax credits. For a prospective franchisee, understanding these figures is crucial as they reflect the company's overall tax position and potential future tax obligations or benefits. It is important to note that these figures are based on specific accounting methods and tax regulations, and can be complex to interpret without professional advice.