Income Tax

3 Months Ended

Mar. 31, 2021

Income Tax Disclosure [Abstract]

INCOME TAX

NOTE 8—INCOME TAX

The Company’s net deferred tax asset at March 31, 2021, is as follows:

Deferred tax asset
Organizational costs/Start-up expenses	$	110
Federal Net Operating Loss		90,759
Total deferred tax asset		90,869
Valuation allowance		(90,869	)
Deferred tax asset, net of allowance	$	—

The income tax benefit for the three months ended March 31, 2021, consists of the following:

Federal
Current	$	—
Deferred		(90,869	)
State
Current	$	—
Deferred		—
Change in valuation allowance		90,869
Income tax benefit	$	—

As of March 31, 2021, the Company had U.S. federal and state net operating loss carryovers (“NOLs”) of $432,713 available to offset future taxable income. These NOLs carryforward indefinitely. The NOLs may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state tax provisions. The amount of the annual limitation, if any, will generally be determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years.  

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 determined that a full valuation allowance was required.

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

Statutory federal income tax rate	21.0	%
State taxes, net of federal tax benefit	0.0	%
Permanent Book/Tax Differences	(14.4	)%
Valuation allowance	(5.6	)%
Income tax provision	0.0	%

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’s tax returns since inception remain open and subject to examination.