Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.22.0.1
Income Taxes
12 Months Ended
Dec. 31, 2021
Income Taxes  
Income Taxes

9.      Income Tax

The provision for income taxes was deemed to be de minimis for the period from December 17, 2020 (inception) through December 31, 2020. The Company’s deferred tax assets were deemed to be de minimis as of December 31, 2020.

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

    

December 31,

 2021

Deferred tax assets (liability)

 

  

Net operating loss carryforward

$

38,345

Startup/Organization Expenses

 

332,625

Total deferred tax assets (liability)

 

370,970

Valuation Allowance

 

(370,970)

Deferred tax assets (liability)

$

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

    

December 31,

2021

Federal

 

  

Current

$

Deferred

 

(370,970)

State and Local

 

  

Current

 

Deferred

 

Change in valuation allowance

 

370,970

Income tax provision

$

As of December 31, 2021, the Company had $181,596 of U.S. federal net operating loss carryovers available to offset future taxable income. The federal net operating loss 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 the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31, 2021, the change in the valuation allowance was $370,970.

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

    

December 31,

 

2021

 

Statutory federal income tax rate

 

21.0

%

State taxes, net of federal tax benefit

 

0.0

%

Change in fair value of derivative liabilities

 

(30.8)

%

Change in fair value of convertible promissory note

 

0.04

%

Offering costs attributable to warrant liabilities

 

4.36

%

Valuation allowance

 

5.4

%

Income tax provision

 

0.0

%

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, 2020 and 2021 remain open and subject to examination.