INCOME TAX

12 Months Ended

Dec. 31, 2023

INCOME TAX

INCOME TAX

NOTE 9. INCOME TAX

The Company’s net deferred tax assets were offset with a valuation allowance resulting in zero deferred tax assets, net of allowance as of December 31, 2023 and 2022.

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

	December 31,
	2023		2022
Deferred tax assets
Net operating loss carryforward	$	461,882	$	(379)
Start-up/organization expenses		1,622,610		962,297
Total deferred tax assets		2,084,492		961,918
Valuation allowance		(2,084,492)		(961,918)
Deferred tax assets, net of allowance	$	—	$	—

The income tax provision consists of the following:

	For the years ended December 31,
	2023		2022
Federal
Current	$	—	$	187,225
Deferred		(926,728)		(741,805)
State
Current		—		—
Deferred		(191,524)		(153,306)
Change in valuation allowance		1,118,252		895,111
Income tax provision	$	—	$	187,225

As of December 31, 2023 and 2022, the Company has $1,822,738 and $0 of U.S. federal and state net operating loss carryovers available to offset future taxable income, respectively.

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 years ended December 31, 2023 and 2022, the change in the valuation allowance was $1,118,252 and $895,111, respectively.

A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2023 and 2022 is as follows:

	December 31,
	2023		2022
Statutory federal income tax rate	21.0	%	21.0	%
State taxes, net of federal tax benefit	4.3	%	4.3	%
Change in fair value of Bridge Note - bifurcated derivative	0.7	%	(0.7)	%
Change in fair value of PIPE forward contract derivative	1.0	%	(1.4)	%
Initial fair value of ELOC	(1.2)	%	—
Initial fair value of Additional Bridge	0.1	%	—
Change in fair value of Exchange Note	(0.6)	%	—
Change in fair value of ELOC	0.0	%	—
Change in fair value of Additional Bridge Note	0.0	%	—
Change in valuation allowance	(25.3)	%	(29.3)	%
Income tax provision	0.0	%	(6.1)	%

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.