Q: Where is the tax obligation on the financial statements? Is it the franchise tax board line item or is that something else?
A: Since Total Coverage, Inc. (TCI) is a Subchapter S corporation, you will not find any federal taxes – nor most state taxes – on the financial statements as they are not obligations of the entity. The taxable obligation of TCI (or any Non-Subchapter C corporation) flows through to the owners of the entity. In the case of TCI, the net taxable income as reported on TCI’s information only business income tax return filing will flow through to the sole owner, Larry Crevin. You will find this taxable income amount on Larry Crevin’s Schedule K-1 (Form 1120S) which was filed as part of TCI’s business income tax return filing.
The “franchise tax board” line item to which you refer is an obligation that is assessed directly to the entity by some states, including California and New York. It is the only federal or state Income tax obligation that is the responsibility of the entity and not the responsibility of the owners.