Income Taxes

Blocker, a wholly owned subsidiary, has elected to be taxed as a corporation. Accordingly, equity in the flow-through earnings of 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 summary of the provision (benefit) for income taxes, all federal, is as follows:



	2016			2015
Current	$	573,408		$	(163,241	)
Deferred (2016 restated)	(3,880,880		)	—
	$	(3,307,472	)	$	(163,241	)

A reconciliation between the Company’s effective tax rate and the statutory tax rate for the years ended February 29, 2016 and February 28, 2015 follows:



	2016					2015
	Total			Percent		Total			Percent
Statutory federal rate	$	1,443,409		34.00	%	$	337,744		35.00	%
Amount not subject to corporate income taxes	(285,024		)	(6.71	)%	(260,993		)	(27.05	)%
Permanent items	2,450			0.06	%	—			—	%
Pass-through tax credits	(46,324		)	(1.09	)%	(436,360		)	(45.22	)%
Adjustments to estimated taxable income of equity method investee	114,487			2.70	%	(612,548		)	(63.48	)%
Change in valuation allowance (2016 restated)	(4,536,470		)	(106.86	)%	808,916			83.83	%
Tax expense (benefit) at effective rate (2016 restated)	$	(3,307,472	)	(77.90	)%	$	(163,241	)	(16.92	)%

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. During the fourth quarter of 2016, once the ERI stock was no longer trading restricted, the Company decided to sell its entire investment in the ERI stock and completed the liquidation before these financial statements were available for issuance. With these sales and the utilization of net operating losses and income tax credit carryforwards, management determined that it was more likely than not that the remaining deferred tax assets would be fully realized. Accordingly, the full valuation allowance that was recorded as of February 28, 2015 has been reversed and no valuation allowance has been recorded as of February 29, 2016.

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 29, 2016 and 2015.



	2016			2015
Tax credit carryforwards	$	—		$	436,360
Basis difference for marketable securities (2016 restated)	(1,923,740		)	5,057,227
Basis difference in equity method investee (2016 restated)	517,795			875,819
Acquisition costs	152,591			157,079
Contributions limitation and carryforward	—			106,029
Net operating loss carryforward	—			191,562
Subtotal	(1,253,354		)	6,824,076
Less: valuation allowance	—			(6,824,076		)
Net deferred tax liability	$	(1,253,354	)	$	—