Income Tax

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Tax

Note 9. Income Tax

The Company’s net deferred tax assets (liability) at December 31, 2022 and 2021 are as follows:

	December 31, 2022			December 31, 2021
Deferred tax assets (liability)
Federal net operating loss	$	—		$	33,691
Organizational costs/Startup expenses		237,677			44,336
Unrealized gain on Trust Account		(79,128	)
Total deferred tax assets (liability)		158,549			78,028
Valuation allowance		(237,677	)		(78,028	)
Deferred tax assets (liability), net of allowance	$	(79,128	)	$	—

The income tax provision for the year ended December 31, 2022 and 2021 consists of the following:

	December 31, 2022			December 31, 2021
Federal
Current	$	190,069		$	—
Deferred		(80,521	)		(78,028	)
State and Local
Current		—			—
Deferred		—			—
Change in valuation allowance		159,649			78,028
Income tax provision	$	269,197		$	—

As of December 31, 2022 and 2021, the Company had $0 and $166,436 of U.S. federal net operating loss carryovers, respectively, which do not expire, and no state net operating loss carryovers available to offset future taxable income.

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, 2022, the change in the valuation allowance was $159,649. For the period from February 16, 2021 (inception) through December 31, 2021, the change in the valuation allowance was $78,028.

A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2022 and 2021 is as follows:

	December 31, 2022			December 31, 2021
Statutory federal income tax rate		21.0	%		21.0	%
State taxes, net of federal tax benefit		—	%		—	%
Prior year true-up		0.1	%		—	%
Change in Fair Value of Warrants		(30.4	)%		—	%
Change in valuation allowance		(13.7	)%		(21.0	)%
Income tax provision		(23.0	)%		—	%

The Company files income tax returns in the U.S. federal jurisdiction and in New York and is subject to examination by the various taxing authorities.

The Company’s effective tax rates for the period presented differ from the expected (statutory) rates due to the recording of full valuation allowances on deferred tax assets and permanent differences between book and taxable income.