7. Income Taxes

Blocker, a wholly-owned subsidiary, has elected to be taxed as a corporation. Accordingly, equity in the flow-through earnings of Eldorado and Mesquite is taxed to Blocker. NGA incurs certain other costs, primarily associated with being a public company, including professional and other fees, which, for tax purposes, flow through to its members

A reconciliation between the Company's effective tax rate and the statutory tax rate for the years ended December 31, 2011 and 2010 follows:


	2011						2010
	Total			Percent			Total			Percent
Statutory federal rate	$	(2,510,492	)		35.00	%	$	(609,896	)		35.00	%
Amount not subject to corporate income taxes		90,590			(1.26	)%		73,487			(4.22	)%
Permanent items		(14,276	)		0.20	%		(59,925	)		3.44	%
Provision to tax return adjustments		—			—			(6,939	)		0.40	%
Change in valuation allowance		2,434,178			(33.94	)%		603,273			(34.62	)%

Tax at effective rate	$	—			—	%	$	—			—

The Company has recorded a valuation allowance of 100% of its net deferred tax assets as of December 31, 2011 and 2010, as realization of the deferred tax asset is not considered more likely than not. In assessing the realizability of the deferred tax assets management considered whether future taxable income will be sufficient during the periods in which those temporary differences are deductible or before NOLs expire. Management considers the scheduled reversal of deferred tax liabilities, projected taxable income and tax planning strategies in making this assessment.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used to determine taxable income for income tax reporting purposes. The following table presents the significant components of the non-current deferred tax assets (liabilities) of the Company and its consolidated subsidiaries related to its investments in Eldorado and Mesquitefor the years ended December 31, 2011 and 2010.


	2011			2010
Net operating loss carryforward	$	1,562,703		$	837,544
Tax credit carryforward		182,791			168,515
Basis difference for investment in Eldorado Resorts LLC		3,887,377			2,108,504
Acquisition costs		144,800			137,500

Subtotal		5,777,671			3,252,063
Less: valuation allowance		(5,777,671	)		(3,252,063	)

Net deferred tax asset	$	—		$	—

The Company has a federal income tax net operating loss carryforward of $4,464,866 and a federal income tax credit carry forward of $182,791, both of which will expire between 2028 and 2030.