Income Taxes

12 Months Ended

Dec. 31, 2024

Income Taxes [Abstract]

INCOME TAXES

NOTE 8. INCOME TAXES

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

	December 31,			December 31,
	2024			2023
Deferred tax liability
Startup Costs	$	291,092		$	82,679
Unrealized gain – Trust		—			(210,152	)
Total deferred tax asset (liability)		291,092			(127,473	)
Valuation allowance		(291,092	)		(82,679	)
Deferred tax liability, net of allowance	$	—		$	(210,152	)

The income tax provision for the year ended December 31, 2024 and 2023 consists of the following:

	December 31,			December 31,
	2024			2023
Federal
Current	$	860,400		$	306,834
Deferred		(418,565	)		128,145
State
Current		—			—
Deferred		—			—
Penalties and interests on underpayment of estimated income taxes		75,181			—
Change in valuation allowance		208,413			82,007
Income tax provision	$	725,429		$	516,986

As of December 31, 2024 and 2023, the Company had no U.S. federal net operating loss carryovers available to offset future taxable income. The federal net operating loss can be carried forward indefinitely. As of December 31, 2024 and 2023, the Company did not have any 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 years ended December 31, 2024 and 2023, the change in the valuation allowance were $208,413 and $82,007, respectively.

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

	December 31,			December 31,
	2024			2023
Statutory federal income tax rate		21.0	%		21.0	%
Fair value of compensation expense		—			2.3	%
Penalties and interests on income taxes		7.5	%		0.0	%
Merger & acquisitions related costs		23.0	%		0.0	%
Change in valuation allowance		20.8	%		4.4	%
Income tax provision		72.3	%		27.7	%

The Company’s effective tax rates for the periods presented differ from the expected (statutory) rates due to stock-based compensation expense, interest and penalties related to income taxes, merger and acquisition related costs, and the valuation allowance on the deferred tax assets related to organization expenses.

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.