What is the deferred tax asset for Itan for the year ending December 31, 2024?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
-year ADA. For the years ended December 31, 2024 and 2023, there was an allocation of $11,500 and $0, respectively, towards revenue classified as Area Development Agreement fees on the statements of earnings. As of December 31, 2024 and 2023, contract liabilities is $103,500 and $115,000 .
NOTE 9 INCOME TAXES
Income tax expense is calculated as follows:
| 2024 | 10 | 2023 | ||
|---|---|---|---|---|
| Current taxes: | ||||
| Federal | $ | - | $ | 64,194 |
| State | 6,013 6,013 | 32,905 97,099 | ||
| Deferred taxes: | ||||
| Federal | 5,153 | 1,772 | ||
| State | 2,149 7,302 | 818 2,590 | ||
| Income tax expense | $ | 13,315 | $ | 99 |
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the deferred tax asset for the year ending December 31, 2024, is $40,619. The deferred tax asset and liability are derived from the tax return being on the cash basis of accounting and differences between tax and GAAP depreciation.
A deferred tax asset represents a reduction in future income taxes that is recognizable on the balance sheet. It arises when the amount of taxes already paid exceeds the amount of taxes due per accounting standards. This can occur due to timing differences in recognizing revenue and expenses for tax and accounting purposes. For Itan franchisees, understanding deferred tax assets and liabilities is crucial for financial planning and forecasting.
The FDD also notes that there are permanent differences of approximately -$30,000 for the year ending December 31, 2024, due to differences in the treatment of the marketing funds between tax and GAAP. Itan files income taxes in the United States of America and the State of California.