Federal Income Tax Matters

12 Months Ended

Sep. 30, 2022

Schedule of Investments [Abstract]

Federal Income Tax Matters

Note 8. Federal Income Tax Matters

The Company has elected to be treated and intends to be subject to tax as a RIC under Subchapter M of the Code. As a result, the Company must distribute substantially all of its net taxable income each tax year as dividends to its stockholders.

Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal tax regulations, which may differ from amounts determined in accordance with GAAP and those differences could be material. These book-to-tax differences are either temporary or permanent in nature. Reclassifications due to permanent book-tax differences have no impact on net assets.

The following permanent differences were reclassified for tax purposes among the components of net assets for the years ended September 30, 2022, 2021 and 2020:

	Years ended September 30,
	2022		2021		2020
Increase (decrease) in Paid in Capital in Excess of Par	$	(750)	$	(1,425)	$	—
Increase (decrease) in Distributable Earnings (Losses)	750		1,425		—

Taxable income generally differs from net increase (decrease) in net assets resulting from operations for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses and generally excludes unrealized appreciation (depreciation) on investment transactions as investment gains and losses are not included in taxable income until they are realized.

The following table reconciles net increase (decrease) in net assets resulting from operations to taxable income for the years ended September 30, 2022, 2021 and 2020:

	Years ended September 30,
	2022		2021		2020
Net increase (decrease) in net assets resulting from operations	$	153,440	$	340,280	$	54,872
Net change in unrealized (appreciation) depreciation on investment transactions	61,898		(165,246)		65,527
Other income not currently taxable	(7,574)		(13,466)		(5,573)
Expenses not currently deductible	18,652		33,125		41,295
Other income for tax but not book	5,846		8,215		9,092
Other deductions/losses for tax not book	(519)		(5,295)		(2,091)
Other realized gain/loss differences	41,313		(2,762)		18,610
Taxable income before deductions for distributions	$	273,056	$	194,851	$	181,732

The tax character of distributions paid during the years ended September 30, 2022, 2021 and 2020 was as follows:

	Years ended September 30,
	2022		2021		2020
Ordinary Income	$	204,806	$	189,204	$	190,874
Long-Term Capital Gains	—		5,648		4,691
Return of Capital	—		—		6,625

The tax basis components of distributable earnings/(accumulated losses) and reconciliation to accumulated earnings/(deficit) on a book basis for the years ended September 30, 2022, 2021 and 2020 were as follows:

	As of September 30,
	2022		2021		2020
Undistributed ordinary income – tax basis	$	39,466	$	—	$	—
Undistributed realized gains – tax basis	28,784		—		—
Net unrealized appreciation (depreciation) on investments	(204,442)		(82,787)		(217,673)
Other temporary differences	3,847		1,058		(10,909)
Total accumulated earnings (deficit) – book basis	$	(132,345)	$	(81,729)	$	(228,582)

Capital losses in excess of capital gains earned in a tax year may generally be carried forward and used to offset capital gains, subject to certain limitations. Capital losses incurred by the Company in tax years beginning after September 30, 2011 are not subject to expiration and retain their character as either short-term or long-term capital losses. As of September 30, 2022, the Company estimates that it will not have any capital loss carryforward available for use in subsequent tax years.

For tax purposes, the Company may elect to defer any portion of a post-October capital loss or late-year ordinary loss to the first day of the following fiscal year. As of September 30, 2022 and September 30, 2021, the Company elected to defer $0 and $2,270 of ordinary losses, respectively. The Company did not elect to defer any short-term capital losses and long-term capital losses as of both September 30, 2022 and September 30, 2021. For the year ended September 30, 2020, the Company elected to defer short-term capital losses and long-term capital losses of $81 and $11,886, respectively.

For the tax year ended September 30, 2022, the Company estimates taxable income in excess of the distributions made from such taxable income during the tax year, and therefore, the Company has elected to carry forward the excess for distribution to stockholders in 2023. The amount carried forward to 2023 is estimated to be approximately $39,466 of ordinary income and $28,784 of long term capital gain, although these amounts will not be finalized until the 2022 tax returns are filed in 2023.

As of September 30, 2022, the federal tax cost of investments was $5,683,319 resulting in estimated gross unrealized gains and losses of $84,731 and $321,694, respectively.

The Company has consolidated subsidiaries that are subject to U.S. federal and state corporate-level income taxes. For the years ended September 30, 2022 and 2021, the Company recorded a tax expense for taxable subsidiaries of $1,229 and $543, respectively. For the year ended September 30, 2020, the Company did not record a tax expense for taxable subsidiaries. As of September 30, 2022, the Company recorded a net deferred tax liability of $1,398 for taxable subsidiaries, which is included in accounts payable and other liabilities on the Consolidated Statements of Financial Condition. The deferred tax liability primarily resulted from unrealized appreciation on the investments held at the taxable subsidiaries. As of September 30, 2021, the Company recorded a net deferred tax liability of $543 for taxable subsidiaries, which is included in accounts payable and other liabilities on the Consolidated Statements of Financial Condition. The deferred tax liability primarily resulted from unrealized appreciation on the investments held at the taxable subsidiaries.