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Income Tax
6 Months Ended
Jun. 30, 2022
Income Tax Disclosure [Abstract]  
INCOME TAX

NOTE 8—INCOME TAX

 

The Company’s net deferred tax asset at June 30, 2022, is as follows: 

 

Deferred tax asset      
Organizational costs/Start-up expenses   $ 14,036  
Federal Net Operating Loss     228,058  
Total deferred tax asset     242,094  
Valuation allowance     (242,094 )
Deferred tax asset, net of allowance   $  

 

As of June 30, 2022, and December 31, 2021, the Company had U.S. federal and state net operating loss carryovers (“NOLs”) of $66,839 and $248,838, respectively, available to offset future taxable income. These NOLs carryforward indefinitely. The NOLs may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions. The amount of the annual limitation, if any, will generally be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.

 

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 determined that a full valuation allowance was required.

 

A reconciliation of the income tax rate to the Company’s effective tax rate for the six months ended June 30, 2022, is as follows:

 

Statutory federal income tax rate     21.0 %
State taxes, net of federal tax benefit     0.0 %
Permanent Book/Tax Differences     (21.6 )%
Valuation allowance     0.8 %
Income tax provision     0.2 %

 

The Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination by the various taxing authorities. The Company’s tax returns since inception remain open and subject to examination.