What is the deferred tax liability for Itan for the year ending December 31, 2023?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
he opening of ten to twenty salons over ten years. This amount is to be recognized on a straight-line basis over the course of the ten year ADA. For the years ended December 31, 2023 and 2022 there have been no allocations towards revenue on the statements of earnings.
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NOTE 9 INCOME TAXES
Income tax expense is calculated as follows:
| 2023 | 2022 | |||
|---|---|---|---|---|
| Current taxes: | ||||
| Federal | $ | 64,194 | $ 51,157 | |
| State | 32,905 97,099 | 25,590 76,747 | ||
| Deferred taxes: | ||||
| Federal | 1,772 | 27, |
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, the deferred tax liability for the year ending December 31, 2023, was $39,617. The deferred tax liability and asset are due to the tax return being on the cash basis of accounting and differences between tax and GAAP depreciation. There were also permanent differences of approximately $54,000 for the year ending December 31, 2023, due to differences in the treatment of the marketing funds between tax and GAAP.
A deferred tax liability represents the amount of income tax payable in future years because of temporary differences between the carrying amount of an asset or liability in a company's financial statements and its tax basis. In simpler terms, it's a tax that Itan owes in the future because of how it reports its finances now.
For a prospective Itan franchisee, understanding these deferred tax implications is crucial for assessing the overall financial health and stability of the franchise. It's important to note that these figures are specific to Itan Franchising, Inc. and may not be representative of individual franchisee operations. Franchisees should consult with their own financial advisors to understand the tax implications specific to their business.