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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Taxes [Abstract]  
INCOME TAXES

NOTE 8. INCOME TAXES

 

The Company’s net deferred tax assets and liabilities are as follows:

 

   December 31,   December 31, 
   2025   2024 
Deferred tax liability        
Startup Costs $474,767  $291,092 
Total deferred tax asset  474,767   291,092 
Valuation allowance  (474,767)  (291,092)
Deferred tax liability, net of allowance $—  $— 

 

The income tax provision for the year ended December 31, 2025 and 2024 consists of the following:

 

   December 31,   December 31, 
   2025   2024 
Federal        
Current $182,500  $860,400 
Deferred  (183,676)  (418,565)
State          
Current  —   — 
Deferred  —   — 
Penalties and interests on underpayment of estimated income taxes  46,687   75,181 
Change in valuation allowance  183,676   208,413 
Income tax provision $229,187  $725,429 

 

As of December 31, 2025 and 2024, the Company had no U.S. federal net operating loss carryovers available to offset future taxable income. As of December 31, 2025 and 2024, the Company did not have any 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 years ended December 31, 2025 and 2024, the change in the valuation allowance were $183,676 and $208,413, respectively.

 

A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:

 

   December 31,
2025		   December 31,
2024		 
Statutory federal income tax rate $(1,692,801)  21.0% $210,648   21.0%
Penalties and interests on income taxes  85,843   (1.0)%  75,181   7.5%
Loss on debt extinguishment of promissory note  1,306,823   (16.2)%  —   —%
Loss on change in fair value of promissory note and forward settlement contract  45,669   (0.6)%  —   —%
Merger & acquisitions related costs  299,977   (3.7)%  231,187   23.0%
Change in valuation allowance  183,676   (2.3)%  208,413   20.8%
Income tax provision $229,187   (2.8)% $725,429   72.3%

 

As of December 31, 2025 and 2024, the Company reported a net deferred tax liability of $0, and the deferred tax asset of $474,767 and $291,092, respectively, was fully offset by a valuation allowance. The Company’s effective tax rate was (2.8)% and 72.3% for the years ended December 31, 2025 and 2024, respectively. The effective tax rate differs from the statutory tax rate of 21% for the years ended December 31, 2025 and 2024, due to interest and penalties related to income taxes, loss on debt extinguishment of promissory note, loss on change in fair value of promissory note and forward settlement contract, merger and acquisition related costs, and the valuation allowance on the deferred tax assets related to organization expenses.

 

Total income taxes paid for the years ended December 31, 2025 and 2024 are presented below:

 

   December 31,   December 31, 
   2025   2024 
Federal $1,037,918  $347,716 
Total income taxes paid $1,037,918  $347,716 

 

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 has no foreign operations and therefore no foreign tax disclosures are required.