Income Taxes |
6 Months Ended |
|---|---|
Jun. 30, 2024 | |
| Income Taxes | |
| Income Taxes | Note 8—Income Taxes While ASC 740 identifies usage of an effective annual tax rate for purposes of an interim provision, it does allow for estimating individual elements in the current period if they are significant, unusual or infrequent. Computing the effective tax rate for the Company is complicated due to the potential impact of the timing of any Business Combination expenses and the actual interest income that will be recognized during the year. The Company has taken a position as to the calculation of income tax expense in a current period based on ASC 740-270-25-3 which states, “If an entity is unable to estimate a part of its ordinary income (or loss) or the related tax (benefit) but is otherwise able to make a reasonable estimate, the tax (or benefit) applicable to the item that cannot be estimated shall be reported in the interim period in which the item is reported.” The Company believes its calculation to be a reliable estimate and allows it to properly take into account the usual elements that can impact its annualized book income and its impact on the effective tax rate. As such, the Company is computing its taxable loss and associated income tax provision based on actual results through June 30, 2024. The Company’s effective tax rate was (43.6%) and (7.0%) for the three months ended June 30, 2024 and 2023, respectively. The Company’s effective tax rate was (52.4)% and (12.0)% for the six months ended June 30, 2024 and 2023, respectively. The difference between the effective tax rate of (43.6%) and (52.4)% for the three and six months ended June 30, 2024 and the U.S. federal statutory rate of 21% for the three and six months ended June 30, 2024 was primarily due to permanent differences resulting from transaction costs associated with the Company’s proposed business combination (Note 1) and the interest and penalties incurred, and the temporary difference resulting from the change in the valuation allowance recorded against the deferred taxes arising from the Company’s startup costs. The difference between the effective tax rate of (7.0%) and (12.0)% for the three and six months ended June 30, 2023 and the U.S. federal statutory rate of 21% for the three and six months ended June 30, 2023 was primarily due to permanent differences resulting from transaction costs associated with the Company’s proposed business combination (Note 1) and the change in the valuation allowance, resulting from recognizing a full valuation allowance against the deferred tax assets arising from the Company’s startup costs. As of June 30, 2024, and December 31, 2023, the Company has no uncertain tax positions related to federal and state income taxes. The 2022 and 2021 federal tax returns for the Company remain open for examination. The assessed interest are penalties are classified in the unaudited condensed financial statements as tax expense. For the three and six months ended June 30, 2024, the Company incurred $57,416 and $177,374, respectively, of interest and penalties on the unremitted income tax obligations. No interest or penalties were incurred during the three and six months ended June 30, 2023. |