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Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
INCOME TAX

NOTE 9. INCOME TAX

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

 

December 31,
2022

  

December 31,
2021

Deferred tax assets

  

 

  

 

  

 

  

 

Net operating loss carryforward

  

$

—

 

  

$

35,810

 

Startup/Organization Expenses

  

 

414,684

 

  

 

141,779

 

Total deferred tax assets

  

 

414,684

 

  

 

177,589

 

Valuation Allowance

  

 

(414,664

)

  

 

(177,589

)

Deferred tax assets

  

$

—

 

  

$

—

 

The income tax provision for the year ended December 31, 2022 and for the period from February 12, 2021 (inception) through December 31, 2021 consists of the following:

 

December 31,
2022

  

For the
Period From
February 12, 2021
(Inception)
Through
December 31,
2021

Federal

  

 

  

 

  

 

  

 

Current

  

$

434,898

 

  

$

—

 

Deferred

  

 

(166,071

)

  

 

(177,589

)

State and Local

  

 

  

 

  

 

  

 

Current

  

 

89,879

 

  

 

—

 

Deferred

  

 

(71,024

)

  

 

—

 

Change in valuation allowance

  

 

237,095

 

  

 

177,589

 

Income tax provision

  

$

524,777

 

  

$

—

 

As of December 31, 2022 and 2021, the Company had $0 and $170,524 of U.S. federal net operating loss carryovers, respectively, available to offset future taxable income, which do 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, 2022, the change in the valuation allowance was $237,095. For the period from February 12, 2021 (inception) through December 31, 2021, the change in the valuation allowance was $177,589.

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

  

4.34

%

  

—

%

Prior year true up

  

(0.58

)%

  

—

%

Change in fair value of warrants

  

(20.26

)%

  

(27.57

)%

Penalties on franchise tax obligations

  

0.05

%

  

—

 

Other permanent differences

  

—

%

  

1.85

%

Valuation allowance

  

3.80

%

  

4.80

%

Effective tax rate

  

8.35

%

  

0.00

%

As of December 31, 2022 and 2021, the Company’s deferred tax asset had a full valuation allowance recorded against it. Our effective tax rate was 8.35% and 0.00% for the years ended December 31, 2022 and 2021, respectively. The effective tax rate differs from the statutory tax rate of 21% for the years ended December 31, 2022 and 2021, due to changes in fair value in warrant liabilities, the valuation allowance on the deferred tax assets, a prior year true up, and penalties on franchise tax obligations. 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, 2022 and 2021 remain open and subject to examination.