Company: EHC
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0000785161-25-000009
Chunk: 67

Company: Encompass Health Corp
Filing Date: 2025-02-28
Form: 10-K
Item: Item 16
Chunk 67
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 related to pass-through entities, which is referred to as the impact of noncontrolling interests in this discussion.

F-39

Encompass Health Corporation and SubsidiariesNotes to Consolidated Financial Statements

Deferred income taxes recognize the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and amounts used for income tax purposes and the impact of available NOLs. The significant components of our deferred tax assets and liabilities are presented in the following table (in millions): As of December 31, 20242023Deferred income tax assets:  Net operating loss$8.8 $23.1 Insurance reserve20.9 20.1 Stock-based compensation24.0 21.4 Revenue reserves8.0 7.6 Operating lease liabilities7.9 8.8 Other accruals29.4 26.2 Tax credits17.0 14.6 Total deferred income tax assets116.0 121.8 Less: Valuation allowance(21.0)(28.4)Net deferred income tax assets95.0 93.4 Deferred income tax liabilities:  Intangibles(63.4)(62.6)Operating lease right-of-use assets(6.8)(7.8)Property, net(18.8)(18.1)Carrying value of partnerships(110.9)(91.7)Other(0.3)(0.2)Total deferred income tax liabilities(200.2)(180.4)Net deferred income tax liabilities$(105.2)$(87.0)We have state NOLs of $8.8 million that expire in various amounts at varying times through 2034. For the years ended December 31, 2024 and 2023, the net decrease in our valuation allowance was $7.4 million and $7.4 million, respectively. The decrease in our valuation allowance in 2024 and 2023 related primarily to the utilization and expiration of state NOLs.As of December 31, 2024, we have a remaining valuation allowance of $21.0 million. This valuation allowance remains recorded primarily due to unusable foreign tax credits generated by our operations in Puerto Rico. We determined it was necessary to maintain a valuation allowance on our foreign tax credits due to uncertainties related to our ability to utilize a portion of these credits before they expire. The amount of the valuation allowance has been determined based on