What was the balance of the tax valuation allowance for Budget at the end of the period in 2023?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
| (in millions) Description | Balance of | at Beginning Period | Expe | nse (Benefit) | Other Adjustments (a) | _ | Deductions | Balance at End of Period |
|---|---|---|---|---|---|---|---|---|
| Tax Valuation Allowance: Year Ended December 31, 2024 2023 2022 | $ | 106 103 169 | $ | (6) (2) (63) | (15) 5 (3) | $ | - | $ 85 106 103 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, the balance of the tax valuation allowance at the end of the period in 2023 was $106 million. This figure represents Budget's assessment of the portion of its deferred tax assets that may not be realized in the future.
The tax valuation allowance is a contra-asset account used to reduce the carrying value of deferred tax assets when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In Budget's case, this allowance is influenced by factors such as tax loss carryforwards and specific deferred tax assets. The FDD indicates that the valuation allowance is subject to change, decreasing if Budget determines that the related deferred income tax assets are likely to be realized.
For a prospective Budget franchisee, understanding the tax valuation allowance may not have direct operational implications. However, it provides insight into Budget's financial health and its expectations regarding future profitability and tax liabilities. Franchisees may want to discuss with Budget the factors that could influence changes in the valuation allowance and how these changes could reflect on the company's overall financial performance.