When does Ledgers management believe all deferred tax assets will be realized?
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 company's management believes all deferred tax assets will be realized in future periods prior to their expiration. As of December 31, 2024, the net operating losses approximate $2,900,000. These deferred tax assets have not been reduced by a valuation allowance.
Deferred tax assets arise from net operating loss carryforwards, which can be used to reduce future taxable income, resulting in tax savings. The fact that Ledgers' management has not established a valuation allowance suggests they are confident in the company's ability to generate sufficient future taxable income to utilize these loss carryforwards.
For a prospective franchisee, this indicates Ledgers' expectation of future profitability. However, the realization of these assets depends on the company's actual future financial performance, which is subject to various economic and business risks. It is important to note that this belief is based on management's current assessment and could change if future results differ from their expectations.