What was the computed 'expected' tax expense for Potbelly Sandwich Works in 2024?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| U.S. federal statutory tax | 21.0% | 21.0% | 21.0% |
| Computed “expected” tax expense | $ 1,635 | $ 1,266 | $ 981 |
| Increase (reduction) resulting from: | |||
| Change in valuation allowance | (35,269) | (1,526) | 2,280 |
| Minority interest | (218) | 96 | 77 |
| Permanent differences | 1,477 | 805 | (1,755) |
| State and local income taxes, net of federal income tax effect | 295 | 793 | (287) |
| FICA and other tax credits | (487) | (297) | (559) |
| Equity compensation | (815) | 159 | (43) |
| Tax rate changes and other | (163) | (387) | (367) |
| Income tax (benefit) expense | $ (33,545) | $ 909 | $ 327 |
Source: Item 23 — RECEIPTS (FDD pages 79–355)
What This Means (2025 FDD)
According to Potbelly Sandwich Works's 2025 Franchise Disclosure Document, the computed "expected" tax expense for 2024 was $1,635. This figure is derived using a U.S. federal statutory tax rate of 21.0%.
The document also provides a breakdown of factors that increased or reduced the income tax expense. A significant reduction resulted from a change in valuation allowance, amounting to $(35,269). Other notable items include minority interest ($(218)), permanent differences ($1,477), state and local income taxes net of federal income tax effect ($295), FICA and other tax credits ($(487)), equity compensation ($(815)), and tax rate changes and other ($(163)).
It's important to note that the actual income tax (benefit) expense reported was $(33,545), which is substantially different from the computed expected tax expense of $1,635 due to the various adjustments listed. A prospective franchisee should consult with a financial advisor to understand the implications of these tax adjustments and how they might affect the overall financial performance of Potbelly Sandwich Works.