NOTE 10. INCOME TAXES

The Company’s net deferred tax assets

are

as follows:


	December 31, 2021
Deferred tax assets:
Net operating losses	$	33,154
Startup/organizational costs		101,371

Total deferred tax assets		134,525

Valuation Allowance		134,525

Deferred tax asset, net of allowance	$	—

Below is breakdown of the income tax provision.


	For the Period From February 9, 2021 (Inception) Through December 31, 2021
Federal
Current	$	—
Deferred		134,525
State and local
Current		—
Deferred		—
Change in valuation allowance		(134,525	)

Income tax provision	$	—

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, the change in the valuation allowance was $134,525.

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


	For the Period From February 9, 2021 (Inception) Through December 31, 2021
U.S. federal statutory rate		21.0	%
Other		2.80	%
Valuation allowance		(23.80	)%

Income tax provision		—	%

The Company’s effective tax rates for the periods presented differ from the expected (statutory) rates due to changes in fair value of warrants, warrant issuance costs and the recording of full valuation allowances on deferred tax assets. 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 since inception remain open to examination by the taxing authorities. The Company considers New York to be a significant state tax jurisdiction. As of December 31, 2021, the Company had $157,833 of U.S. federal net operating loss carryovers available to offset future taxable income. The Federal NOLs can be carried forward indefinitely.