Company: NOEMW
Filing Date: 2025-05-13
Form Type: 10-Q
Source: 0001213900-25-042720
Chunk: 14

Company: CO2 Energy Transition Corp.
Filing Date: 2025-05-13
Form: 10-Q
Item: Part I, Item 1
Chunk 14
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assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,”
approximates the carrying amounts represented in the balance sheets, primarily due to its short-term nature.

Income Taxes

The Company follows the asset
and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

11

CO2 ENERGY TRANSITION CORP.

NOTES TO CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2025

(Unaudited) 

The Company accounts for
income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets
and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and
for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation
allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. As of March
31, 2025 and December 31, 2024, the Company had a full valuation allowance against the deferred tax assets.

ASC 740 also clarifies the
accounting for uncertainty in income taxes recognized in a company’s unaudited condensed financial statements and prescribes a recognition
threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken
in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by
taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period,
disclosure and transition.

The Company’s effective
tax rate was 26.43% and 0.00% for the three months ended March 31, 2025, and