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 February 28, 2015 and 2014 follows:



	2015					2014
	Total			Percent		Total			Percent
Statutory federal rate	$	337,744		35.00	%	$	1,406,202		35.00	%
Amount not subject to corporate income taxes	(260,993		)	(27.05	)%	(84,696		)	(2.11	)%
Pass-through tax credits	(436,360		)	(45.22	)%	(46,254		)	(1.15	)%
Adjustments to estimated taxable income of equity method investees	(612,548		)	(63.48	)%	478			0.01	%
Change in valuation allowance	808,916			83.83	%	(1,112,489		)	(27.69	)%
Tax at effective rate	$	(163,241	)	(16.92	)%	$	163,241		4.06	%

In assessing the realizability of the deferred tax assets, management considers whether future taxable income will be sufficient during the periods in which those temporary differences reverse. Management considers the scheduled reversal of deferred tax liabilities, projected taxable income, and tax planning strategies in making this assessment. Accordingly, the Company has recorded a valuation allowance of 100% of its net deferred tax assets as of February 28, 2015 and 2014, as realization of the deferred tax asset is not considered more likely than not, though subsequent to February 28, 2015, the estimated fair value of the Company's available-for-sale securities has appreciated substantially. If the ERI shares were unrestricted and had been sold as of May 29, 2015, most of the related deferred tax asset could have been realized. However, the Company is restricted from disposing of the investment and the trading value of ERI's shares are subject to possibly significant daily changes in value. Accordingly, management believes there is insufficient information to reduce the valuation allowance at this time.

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 Mesquite as of February 28, 2015 and 2014.



	2015			2014
Tax credit carryforwards	$	436,360		$	—
Basis difference for available-for-sale securities	5,057,227			—
Basis difference in equity method investees
Eldorado	—			4,646,615
Mesquite	875,819			715,853
Acquisition costs	157,079			157,079
Contributions limitation and carryforward	106,029			85,000
Net operating loss carryforward	191,562			—
Subtotal	6,824,076			5,604,547
Less: valuation allowance	(6,824,076		)	(5,604,547		)
Net deferred tax asset	$	—		$	—