According to Ledgers' 2025 Franchise Disclosure Document, the gross deferred tax assets - federal was $502,000 as of December 31, 2023. This figure represents the value of future tax benefits that Ledgers expects to realize related to temporary differences between the financial reporting and tax bases of its assets and liabilities. These temporary differences primarily relate to net operating losses.

Deferred tax assets arise because Ledgers has incurred losses that can be used to reduce taxable income in future years. The company accounts for income taxes using the asset and liability method, which means it calculates deferred tax assets and liabilities based on these temporary differences, using the enacted tax rates expected to be in effect when the differences reverse.

Ledgers' management believes that it is more likely than not that these deferred tax assets will be realized in future periods, and therefore, no valuation allowance has been applied to reduce the reported asset value. This assessment is based on expectations of future pretax earnings and the reversal of temporary differences. A prospective franchisee should understand that the realization of these tax assets depends on Ledgers' future financial performance and applicable tax laws.