Annual report pursuant to Section 13 and 15(d)

Income Tax

v3.22.1
Income Tax
12 Months Ended
Dec. 31, 2021
Income Tax Disclosure [Abstract]  
Income Tax

NOTE 9. INCOME TAX

The income tax provision for the year ended December 31, 2021 consists of the following:

 

 

 

Year

Ended

December 31,

 

 

 

2021

 

Federal

 

 

 

 

Current

 

$

 

Deferred

 

 

(251,348

)

State and Local

 

 

 

 

Current

 

 

 

Deferred

 

 

 

Change in valuation allowance

 

 

251,348

 

Income tax provision

 

$

 

 

 

A reconciliation of the federal income tax rate to the Company’s effective tax rate for the year ended December 31, 2021 is as follows:

 

 

 

December

31, 2021

 

Statutory federal income tax rate

 

 

21.0

%

State taxes, net of federal tax benefit

 

 

0.0

%

Change in fair value of warrant liabilities

 

 

15.6

%

Transaction costs allocable to warrant liabilities

 

 

(7.2

)%

Penalty and Interest

 

 

(0.0

)%

Valuation allowance

 

 

(29.4

)%

Income tax provision

 

 

0.0

%

 

The Company’s net deferred tax assets at December 31, 2021 is as follows:

 

 

 

December 31,

 

 

 

2021

 

Deferred tax assets

 

 

 

 

Net operating loss carryforward

 

$

38,893

 

Startup/Organization Expenses

 

 

212,455

 

 

 

 

 

 

Total deferred tax assets

 

 

251,348

 

Valuation Allowance

 

 

(251,348

)

Deferred tax assets, net

 

$

 

 

As of December 31, 2021, the Company had $185,208 of U.S. federal net operating loss carryforward available to offset future taxable income. The net operating loss carryforward does not expire.

 

In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2021, the change in the valuation allowance was $251,348.

 

The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination by the various taxing authorities. The Company’s tax returns for the year ended December 31 2021 remain open and subject to examination. The Company considers Texas to be a significant state tax jurisdiction.