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Income Taxes
3 Months Ended
May 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Blocker, a wholly owned subsidiary of NGA, has elected to be taxed as a corporation. Accordingly, equity in the flow-through earnings of Mesquite, realized gains on available-for-sale securities, interest income from the Credit Agreement, and interest expense on intercompany borrowings received from NGA to fund a portion of the Credit Agreement are taxed to Blocker. NGA recognizes interest income on intercompany loans to Blocker and incurs certain costs, primarily associated with being a public company, including professional and other fees, which, for tax purposes, flow through to its members. The Company's deferred tax assets consist primarily of the assets related to the difference in the book and tax basis of the investment in Mesquite. The Company’s effective tax rates for the period presented is the statutory federal rate of 35%.
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. During the fourth quarter of the year ended February 29, 2016, once the ERI stock was no longer restricted, the Company decided to sell its entire investment in the ERI stock and completed the liquidation on March 29, 2016 fully realizing the Company's deferred tax assets for which a 100% valuation allowance had been provided in the prior year period.