Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes

Income Taxes

8. Income Taxes

The Company’s taxable income primarily consists of interest income on the Trust Account, less any franchise taxes. The Company’s formation costs are generally considered start-up costs and are not currently deductible.

The income tax provision (benefit) for the year ended December 31, 2022 consists of the following:

Current
Federal	$	279,206
State		86,015
Deferred
Federal		(266,225)
State		(48,573)
Valuation allowance		442,045
Total Income tax provision	$	492,468

The income tax provision (benefit) for the year ended December 31, 2021 consists of the following

Current
Federal	$	—
State		—
Deferred
Federal		(270,918)
State		—
Valuation allowance		270,918
Total Income tax provision	$	—

The Company’s net deferred tax assets for the year ended December 31, 2022 are as follows:

Deferred tax assets
Organization Costs	$	712,963
Net operating loss carryforward		—
Total deferred tax assets		712,963
Valuation allowance		(712,963)
Deferred tax assets, net of allowance	$	—
Deferred tax liabilities
Accrued income	$	(127,247)
Total deferred tax liabilities		(127,247)
Deferred tax assets (liabilities), Net	$	(127,247)

The Company’s net deferred tax assets for the year ended December 31, 2021 are as follows:

Deferred tax assets
Organization Costs	$	237,766
Net operating loss carryforward		33,152
Total deferred tax assets		270,918
Valuation allowance		(270,918)
Deferred tax assets, net of allowance	$	—

As of December 31, 2022, the Company had no U.S. federal and state net operating loss carryforwards available to offset future taxable income. As of December 31, 2021, the Company had $157,867 of U.S. federal tax net operating loss carryforwards and no state net operating loss carryforwards. The federal net operating losses can be carried forward indefinitely.

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 deferred tax assets and therefore established a full valuation allowance of $712,963 as of December 31, 2022. and $270,918 as of December 31,2021.

The Company is subject to U.S. federal income tax as well as Utah state income tax. All tax years since inception remain open to examination by the major taxing jurisdictions to which the Company is subject. The Company is not currently under examination by the IRS or any other taxing jurisdictions for any tax years.

A reconciliation of the statutory income tax rate (benefit) to the Company's effective tax rate for the year ended at December 31, 2022 is as follows:

Statutory federal income tax rate	21.0	%
State tax expense	6.04	%
Share Based Compensation	0.0	%
Change in Valuation Allowance	127.43	%
State rate change	(12.51)	%
Effective Tax Rate	141.96	%

A reconciliation of the statutory income tax rate (benefit) to the Company’s effective tax rate for the year ended at December 31, 2021 is as follows:

Statutory federal income tax rate	21.0	%
State tax expense	0.0	%
Share Based Compensation	(2.65)	%
Change in Valuation Allowance	(18.35)	%
State rate change	0.0	%
Effective Tax Rate	0.0	%

The Company’s effective tax rates for the periods presented differ from the expected (statutory) rates due to recording of full valuation allowances on deferred tax assets, state tax expenses, and change in state rate.