INCOME TAXES |
9 Months Ended |
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Sep. 25, 2022 | |
| Income Tax Disclosure [Abstract] | |
| INCOME TAXES | INCOME TAXES In connection with the Transactions described in Note 1. Description Of Business, we became the sole managing member of Portillo's OpCo, and as a result, began consolidating the financial results of Portillo's OpCo. Portillo's OpCo is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, Portillo's OpCo is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by Portillo's OpCo is passed through to and included in the taxable income or loss of its members, including us, on a pro rata basis. Beginning at the time of the IPO in 2021, we are subject to U.S. federal income taxes, in addition to state and local income taxes with respect to our allocable share of any taxable income or loss of Portillo's OpCo subsequent to the IPO and Transactions, as well as any stand-alone income or loss generated by Portillo's Inc. Income Tax Expense The effective income tax rate for the quarter and three quarters ended September 25, 2022 was 23.9% and 19.5%. The Company’s annual effective tax rate differs from the statutory rate of 21% primarily because the Company is not liable for income taxes on the portion of OpCo’s earnings that are attributable to non-controlling interests and the valuation allowance recorded. Secondary Offering In the third quarter of 2022, in connection with the secondary offering previously discussed in Note 1. Description Of Business, 5,942,559 LLC interests were redeemed by the pre-IPO LLC Members for newly-issued shares of Class A common stock, resulting in an increase in the tax basis of net assets of Portillo's OpCo subject to the provisions of the Tax Receivable Agreement. The Company recorded a deferred tax asset of $44.3 million and an additional TRA liability of $51.1 million. As of September 25, 2022, we estimated that our obligation for future payments under the TRA liability totaled $205.3 million. There were no amounts paid under the TRA for the quarter and three quarters ended September 25, 2022.
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