v3.25.2
Income Tax
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Tax

Note 10 — Income Tax

 

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

 

   December 31,   December 31, 
   2024   2023 
Deferred tax assets          
Startup Costs  $563,038   $362,533 
Valuation allowance   (563,038)   (362,533)
Deferred tax asset (liabilities), net of allowance  $—   $— 

 

 

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

 

   December 31,   December 31, 
   2024   2023 
Federal          
Current  $239,905   $608,864 
Deferred   (200,505)   (279,347)
State          
Current  $—   $— 
Deferred   —    — 
Change in valuation allowance   200,505    199,988 
Income tax provision  $239,905   $529,505 

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or 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 assets, projected future taxable income and tax planning strategies in making this assessment. For the years ended December 31, 2024 and 2023, the change in valuation allowance was $200,505 and $199,988, respectively.

 

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

 

   December 31,   December 31, 
   2024   2023 
Statutory federal income tax rate   21.0%   21.0%
Interest and penalties   (3.47)%   0.12%
Change in fair value of warrants   (0.02)%   (0.05)%
Business combination expenses   (22.84)%   1.10%
Broken Deal   (0.00)%   (4.37)%
Change in valuation allowance   (27.15)%   10.81%
Income tax provision expense   (32.48)%   28.61%

 

The Company’s effective tax rate was (32.48)% and 28.61% for the years ended December 31, 2024 and 2023, respectively. The effective tax rate differs from the statutory tax rate of 21% for the years ended December 31, 2024 and 2023, primarily due to changes in the fair value in warrant liabilities, valuation allowance on the deferred tax assets, non-deductible M&A costs, income tax penalties, and failed deal costs that are fully deductible.

 

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.