v3.25.1
INCOME TAX
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME TAX

NOTE 8. INCOME TAX

The Company’s net deferred tax assets (liability) as of December 31, 2024 and 2023 are as follows:

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

Deferred tax assets (liabilities):

 

 

 

 

 

 

Organizational costs & start-up expenses

 

$

690,713

 

 

$

475,133

 

Loss from operations

 

 

—

 

 

 

—

 

Total deferred tax assets (liabilities), net

 

 

690,713

 

 

 

475,133

 

Valuation allowance

 

 

(690,713

)

 

 

(475,133

)

Deferred tax assets (liability), net of allowance

 

$

—

 

 

$

—

 

The income tax provision for the year ended December 31, 2024 and 2023 consists of the following:

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

Federal:

 

 

 

 

 

 

Current(1)

 

$

517,179

 

 

$

1,027,644

 

Deferred:

 

 

(215,580

)

 

 

(187,264

)

State:

 

 

 

 

 

 

Current

 

 

—

 

 

 

—

 

Deferred

 

 

—

 

 

 

—

 

Change in valuation allowance

 

 

215,580

 

 

 

187,264

 

Provision for income taxes

 

$

517,179

 

 

$

1,027,644

 
(1)
For the year ended December 31, 2024, current federal income taxes includes penalties and interest charges of $41,497.

As of December 31, 2024 and 2023, the Company had no U.S. federal operating loss carryovers available to offset future taxable income, which do not expire.

In assessing the realization of the deferred tax assets (liability), 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 (liability) 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 assets (liability), 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 (liability) and has therefore established a full valuation allowance. For the year ended December 31, 2024, the change in the valuation allowance was $215,580. For the year ended December 31, 2023, the change in the valuation allowance was $187,264.

The Company’s effective tax rate was (14.4%) and 43.4% for the year ended December 31, 2024 and 2023, respectively. The effective tax rate differs from the statutory tax rate of 21% due to the valuation allowance on the deferred tax assets and deductibility of penalties on tax obligations.

A reconciliation of the federal income tax rate to the Company’s effective tax rate as of December 31, 2024 and 2023 is as follows:

 

 

As of December 31,

 

 

 

2024

 

2023

 

Statutory federal income tax rate

 

 

21.0

 

%

 

 

21.0

 

%

 

State taxes, net of federal tax benefit

 

 

—

 

%

 

 

—

 

%

 

Fair value of Non-Redemption Agreement liability

 

 

(6.4

)

%

 

 

—

 

%

 

Transaction costs

 

 

(20.0

)

%

 

 

14.3

 

%

 

Fines and penalties

 

 

(3.0

)

%

 

 

0.2

 

%

 

Permanent book/tax differences

 

 

—

 

 

 

 

—

 

%

 

Change in valuation allowance

 

 

(6.0

)

%

 

 

7.9

 

%

 

Income tax provision

 

 

(14.4

)

%

 

 

43.4

 

%

 

The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination since inception.