NOTE 10. INCOME TAX

The Company’s net deferred tax asset is as follows:


	December 31,
	2020
Deferred tax asset
Startup/organizational expenses	$	596,809
Unrealized gain on marketable securities		(2,900)
Total deferred tax asset		593,909
Valuation Allowance		(593,909)
Deferred tax asset, net of allowance	$	—

The income tax provision consists of the following:


	As of December 31,
	2020
Federal
Current	$	81,422
Deferred		(593,909)

State and Local
Current		—
Deferred		—

Change in valuation allowance		593,909

Income tax provision	$	81,422

As of December 31, 2020, the Company did not have any U.S. federal and 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 period from April 30, 2020 (inception) through December 31, 2020, the change in the valuation allowance was $593,909.

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


	December 31, 2020

Statutory federal income tax rate	21.0	%
State taxes, net of federal tax benefit	0.0	%
Loss on warrant liability	(19.5)	%
Transaction costs incurred in connection with IPO	(0.7)	%
Valuation allowance	(0.9)	%
Income tax provision	(0.1)	%

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 remain open and subject to examination. The Company considers New York to be a significant state tax jurisdiction.