Income Taxes

12 Months Ended

Dec. 31, 2012

9. Income Taxes

The following table reconciles the statutory federal income tax rate to the actual effective income tax rate for 2012 and 2011:


	2012			2011
Percent of pretax loss:
Loss/preopening loss at statutory rate		(35.00%	)		(35.00%	)
Permanent Differences		.02%			—
Valuation allowance increase		34.98%			35.0%

Total		0.0%			0.0%

Deferred tax assets and liabilities are provided for the effects of temporary differences between the tax basis of assets and liabilities and their reported amounts in the balance sheet. These temporary differences result in taxable or deductible amounts in future years.

The components of the Company’s recorded deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011 are as follows:


	2012			2011
Deferred tax assets:
Pre-opening expenses	$	24,211,908		$	9,914,039
Plant, Property, and Equipment		34,416,025			9,963,258
NOL carryforwards		141,012,512			27,890,521
Accruals		5,898,147			2,080,664
Other		5,880,808			2,317,379

Gross deferred tax assets		211,419,401			52,165,861

Deferred tax liabilities:
Other		1,030,316			1,834,966

Net deferred tax liabilities		1,030,316			1,834,966

Net deferred tax assets		210,389,085			50,330,895
Valuation allowance		(210,389,085	)		(50,330,895	)

Deferred tax assets, net	$	—		$	—

For income tax reporting, the Company had federal and state net operating loss carryforwards aggregating approximately $345.2 million and $68.3 million available at December 31, 2012 and 2011, respectively, to reduce future federal and state taxable income. The tax benefits associated with these net operating loss carryforwards are approximately $141.0 million and $27.9 million at December 31, 2012 and 2011, respectively. Such net operating loss carryfowards begin to expire in 2031.

A valuation allowance is recorded if it is more likely than not that a net deferred tax asset will not be realized. In assessing its need for a valuation allowance, the Company considered all available positive and negative evidence including its status as a start-up entity with pre-opening losses and forecasted operating losses. Based on this analysis, the Company has recorded a full valuation allowance against its deferred tax assets. The Company will continue to reassess its valuation allowance on a recurring basis and if future evidence allows for a partial or full release of the valuation allowance a tax benefit will be recorded accordingly in the subsequent period.

Uncertain tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the appropriate year such tax positions are claimed, including any related interest or penalties. The Company did not have any recorded uncertain tax positions as of December 31, 2012 and 2011.

The Company files federal and New Jersey income tax returns and the tax year 2012 and 2011 remain open subject to examination by the tax authorities.

Chapter 11 Case Tax Implications

If the Company’s debt is reduced or restructured as a result of the Chapter 11 case, the Company anticipates that it would realize “cancellation of indebtedness” income for tax purposes, and as a result, the Company could be required to reduce certain tax attributes such as net operating losses (“NOL’s”) and the tax basis of its assets. Any such reductions could result in increased future tax liabilities for the Company. Additionally, the future utilization of its NOL’s, if any, may be limited under Section 382 of the Internal Revenue Code.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 109

-Paragraph 136, 172

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

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Reference 4: http://www.xbrl.org/2003/role/presentationRef

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Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 109

-Paragraph 43, 44, 45, 46, 47, 48, 49

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 740

-SubTopic 10

-Section 50

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Reference 7: http://www.xbrl.org/2003/role/presentationRef

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-Name Accounting Standards Codification

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+ Details

Revel AC, Inc. 10-K