INCOME TAX

12 Months Ended

Dec. 31, 2021

INCOME TAX

INCOME TAX

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

	December 31,
	2021		2020
Deferred tax assets
Net operating loss carryforward	$	19,569	$	2,772
Organizational costs/Startup expenses		1,184,552		56,428
Total deferred tax assets		1,204,121		59,200
Valuation allowance		(1,204,121)		(59,200)
Deferred tax assets, net of allowance	$	—	$	—

The income tax provision consists of the following:

	Years Ended December 31,
	2021		2020
Federal
Deferred	$	(1,144,921)	$	(59,200)
Change in valuation allowance		1,144,921		59,200
Income tax provision	$	—	$	—

As of December 31, 2021 and 2020, the Company had $93,186 and $13,199 of U.S. federal and state net operating loss carryovers available to offset future taxable income, respectively. If a business combination is consummated, these net operating losses will be limited by a Section 382 limitation given there will have been a change in control at the Company.

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 and for the period from May 29, 2020 (inception) through December 31, 2020, the change in the valuation allowance was $1,144,921 and $59,200, respectively.

A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2021 and 2020 is as follows:

	December 31,
	2021		2020
Statutory federal income tax rate	21.0	%	21.0	%
State taxes, net of federal tax benefit	0.0	%	0.0	%
Change in fair value of warrant liabilities	(27.4)	%	(19.8)	%
Transaction costs associated with the Initial Public Offering	0.0	%	(0.8)	%
Change in valuation allowance	6.4	%	(0.3)	%
Income tax provision	0.0	%	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.