To what do the deferred tax assets for Ledgers relate?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
| 022 | |||
|---|---|---|---|
| Deferred tax (benefit): | |||
| Federal | $ (86,000) | $ (80,000) | $ (126,000) |
| State | (18,000) | (18,000) | (27,000) |
| (104,000) | (98,000) | (153,000) | |
| Expense (benefit) from income taxes | $ (104,0 |
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the deferred tax asset relates to net operating loss carryforwards. As of December 31, 2024, the net operating losses approximated $2,900,000.
Ledgers' management believes that all deferred tax assets will be realized in future periods before they expire, and therefore the deferred tax assets have not been reduced by a valuation allowance. A deferred tax asset is an asset on a company's balance sheet that may be used to reduce its future taxable income. It arises when the amount of taxes paid is more than what is shown on the income statement.
For a prospective Ledgers franchisee, this information is relevant because it provides insight into the company's financial management and tax strategy. Understanding the nature and treatment of deferred tax assets can help franchisees assess the financial health and stability of the franchisor. It also demonstrates how Ledgers is managing its tax obligations and planning for future profitability.