Company: ALCE
Filing Date: 2025-01-27
Form Type: S-1
Source: 0001213900-25-007054
Chunk: 232

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-01-27
Form: S-1
Chunk 232
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 of assets and liabilities and their tax basis. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.

F-19

The Company evaluated the provisions
of ASC 740 related to the accounting for uncertainty in income taxes recognized in the financial statements. ASC 740 prescribes a comprehensive
model for how a company should recognize, present, and disclose uncertain positions that the company has taken or expects to take in
its return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing
authorities. Differences between the positions taken or expected to be taken in a tax return and the benefit recognized and measured
pursuant to the interpretation are referred to as “unrecognized benefits”. A liability is recognized for an unrecognized
tax benefit because it represents an enterprise’s potential future obligation to the taxing-authority for a tax position that was
not recognized as a result of applying the provisions of ASC 740.

As a result of the Tax Cuts
and Jobs Act (TCJA) of 2017, the Company analyzed if a liability needed to be recorded for the deemed repatriation of undistributed earnings.
It was determined that there is no outstanding liability associated with this based on overall negative undistributed earnings (accumulated
deficit) in the consolidated foreign group. An additional provision of the TCJA is the implementation of the Global Intangible-Low Taxed
Income Tax, or “GILTI.” The Company has elected to account for the impact of GILTI in the period in which the tax actually
applies to the Company.

Penalties and interest assessed
by income tax authorities would be included in income tax expense. For the period ended December 31, 2023, the Company did not incur
any penalties or interest.

Stock-Based Compensation

The Company accounts for stock-based
compensation in accordance with ASC 718. Stock-based compensation expense for equity instruments issued to employees and non-employees
is measured based on the grant-date fair value of the awards. The fair value of each stock unit is determined based on the valuation
of the Company’s stock on the date of grant. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton
stock option pricing valuation model. The Company uses the simplified method for calculating the expected