How does Budget record net deferred tax assets?

According to Budget's 2025 Franchise Disclosure Document, the company records net deferred tax assets when it believes it is more likely than not that these assets will be realized. This determination involves considering available positive and negative evidence, such as scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent operating results.

If Budget determines that it can realize deferred income tax assets in the future beyond their net recorded amount, it adjusts the valuation allowance. This adjustment would then reduce the provision for income taxes. This process reflects Budget's assessment of the probability that it will be able to use its deferred tax assets to reduce future tax obligations.

For a prospective franchisee, understanding Budget's approach to deferred tax assets is crucial because it can impact the company's overall financial health and profitability. The ability to utilize these assets effectively can reduce Budget's tax burden, potentially freeing up capital for investments or other strategic initiatives. Franchisees may want to inquire about the specific factors that Budget considers when evaluating the realizability of its deferred tax assets and how these assessments could affect the company's financial performance.