Income Taxes

12 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Similar to other sovereign governments, the Mohegan Tribe and its entities, including the Company, are not subject to United States federal income taxes. However, certain of our non-tribal entities are subject to income taxes in various domestic and foreign jurisdictions.

The components of income (loss) before income tax are as follows:

	For the Fiscal Years Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2020
Domestic	$	104,432	$	57,138	$	(124,227)
Foreign	(20,426)		(56,138)		(44,483)
Income (loss) before income tax	$	84,006	$	1,000	$	(168,710)

The components of income tax are as follows:

	For the Fiscal Years Ended
(in thousands)	September 30, 2022		September 30, 2021		September 30, 2020
Current:
Federal	$	—	$	—	$	—
State	292		(325)		(355)
Foreign	—		—		—
Total	292		(325)		(355)
Non-current:
Federal	—		—		—
State	—		—		—
Foreign	(9,102)		6,678		7,049
Total	(9,102)		6,678		7,049
Income tax benefit (provision)	$	(8,810)	$	6,353	$	6,694

The components of deferred income tax benefit or provision result from various temporary differences and relate to items included within the Statements of Operations. The tax effect of these temporary differences are recorded within deferred income tax assets or liabilities as follows:    

	September 30, 2022		September 30, 2021
Deferred income tax assets:
Foreign net operating loss carryforward	$	18,058	$	26,188
Lease obligations	91,447		92,243
Limitation on interest expense deduction	9,749		—
Accumulated book depreciation in excess of tax depreciation	6,909		8,336
Other	1,493		29
Valuation allowance	(19,919)		—
Total	107,737		126,796
Deferred income tax liabilities:
Casino Operating and Services Agreement contract asset	(23,137)		(31,685)
Right-of-use lease assets	(80,728)		(81,656)
Other	(46)		(127)
Total	(103,911)		(113,468)
Deferred income tax asset, net (1)	$	3,826	$	13,328

_________

(1)Recorded within other assets, net.

MGE Niagara generated taxable income of $66.7 million for Canadian tax purposes for the fiscal year ended September 30, 2022. This taxable income will be offset by past net operating losses.

As of September 30, 2022, we have gross income tax net operating loss carryforwards related to our foreign operations of $117.8 million. Such deferred tax assets expire as follows:

(in thousands)
Fiscal years:
2025 through 2029	$	10,707
2030 through 2034	3,522
2035 through 2039	66,636
2040 through 2042	33,386
Indefinite	3,546
Total	$	117,797

We assess the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets. A significant objective negative evidence assessed was the cumulative loss

incurred in connection with Inspire Korea. Such objective evidence limits the ability to consider other subjective evidence, such as our projections of future taxable income.Based on this assessment, we recorded a valuation allowance of $19.9 million to recognize the portion of deferred tax assets that is more likely than not to be realized. However, the amount of deferred tax assets currently considered to be realizable may be adjusted in future periods if objective evidence in the form of taxable income is realized and additional weight is given to subjective evidence, such as our projections of taxable income