6. Income Tax
The Company incurred United States federal income tax expense of approximately $1,062,254 for the period from Inception to December 31, 2017.
On September 15, 2017 and December 15, 2017, the Company made estimated quarterly tax payments of $400,000 and $407,000, respectively, to the Internal Revenue Service (“IRS”) for federal income taxes estimated for 2017 on interest earned in the Trust Account. The funds were paid from the Trust Account. At December 31, 2017, the Company had accrued federal income taxes of $359,823 included in federal income taxes payable on the balance sheet.
The Company’s provision for income tax consists of the following:
|
|
|
For the Period |
|
|
|
|
|
from February 14, |
|
|
|
|
|
2017 (Inception) to |
|
|
|
|
|
December 31, 2017 |
|
|
|
Federal |
|
|
|
|
|
Current |
|
$ |
1,166,823 |
|
|
Deferred |
|
|
(104,569 |
) |
|
State |
|
|
|
|
|
Current |
|
|
— |
|
|
Deferred |
|
|
— |
|
|
Change in valuation allowance |
|
|
— |
|
|
Income tax provision |
|
$ |
1,062,254 |
|
The Company incurred costs related to its search to complete a business combination which are deductible for federal income tax purposes and resulted in the generation of a deferred tax asset of $104,569 which is available to offset future taxable income.
In assessing the realization of deferred tax assets, the Company considers whether it is more likely than not that some portion or 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. The Company considers the scheduled reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, the Company believes that no uncertainty exists with respect to future realization of the deferred tax assets and has not established a valuation allowance at December 31, 2017.
The following table reconciles the U.S. federal statutory tax rate to the effective rate of the Company’s provision for income taxes:
|
|
|
December 31, 2017 |
|
|
|
Provision for income taxes at U.S. federal statutory rate |
|
|
34.0 |
% |
|
Permanent differences |
|
|
4.4 |
% |
|
Rate change from tax reform |
|
|
2.5 |
% |
|
Effective tax rate |
|
|
40.9 |
% |
The guidance for the accounting and reporting for income taxes requires the Company to assess tax positions in cases where the interpretation of the tax law may be uncertain. The Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record significant amounts of unrecognized tax benefits within the next twelve months.