Company: DTSQ
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001641172-25-001417
Chunk: 196

Company: DT Cloud Star Acquisition Corp
Filing Date: 2025-03-31
Form: 10-K
Item: Item 1A
Chunk 196
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 adversely affect our business, financial condition and results of operations and result in a diversion of
the time and resources of our management and board of directors.

An
investment in our units may involve adverse U.S. federal income tax consequences.

An
investment in our units may involve adverse U.S. federal income tax consequences. For instance, there is a risk that an investor’s
entitlement to receive payments in excess of the investor’s initial tax basis in our ordinary shares upon exercise of the investor’s
conversion right or upon our liquidation of the trust account will result in constructive income to the investor, which could affect
the timing and character of income recognition and result in U.S. federal income tax liability to the investor without the investor’s
receipt of cash from us. Furthermore, because there are no authorities that directly address instruments similar to our units, the allocation
an investor makes with respect to the purchase price of the unit between the ordinary shares and rights included in the units could be
challenged by the U.S. Internal Revenue Service (the “IRS”), or the courts.

We
have also not sought a ruling from the IRS as to any U.S. federal income tax consequences described in this Report. The IRS may disagree
with the descriptions of U.S. federal income tax consequences described herein, and its determination may be upheld by a court. Any such
determination could subject an investor or our company to adverse U.S. federal income tax consequences that would be different than those
described in this Report. Accordingly, each prospective investor is urged to consult a tax advisor with respect to the specific tax consequences
of the acquisition, ownership and disposition of our securities, including the applicability and effect of state, local, or foreign tax
laws, as well as U.S. federal tax laws.

37

We
may qualify as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. investors.

In
general, we will be treated as a passive foreign investment company (“PFIC”) for any taxable year in which either (1) at
least 75% of our gross income (looking through certain 25% or more-owned corporate subsidiaries) is passive income or (2) at least 50%
of the average value of our assets (looking through certain 25% or more-owned corporate subsidiaries) is attributable to assets that
produce, or are held for the production of, passive income. Passive income generally includes, without limitation, dividends, interest,