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INCOME AND EXCISE TAXES
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
INCOME AND EXCISE TAXES
11. INCOME AND EXCISE TAXES

For U.S. federal income tax purposes, amounts distributed to the Company’s stockholders as dividends are reported as ordinary income, capital gains, or a combination thereof. Dividends paid per common share for the years ended December 31, 2024, 2023 and 2022 were taxable as follows (unaudited):

 For the Years Ended December 31,
 202420232022
Ordinary income(1)$1.92 $1.92 $1.80 
Capital gains— — 0.07 
Total(2)$1.92 $1.92 $1.87 
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(1)For the years ended December 31, 2024, 2023 and 2022, ordinary income included dividend income of approximately $0.3137, $0.0296 and $0.0582 per share, respectively, that qualified to be taxed at the maximum capital gains rate and, in the case of certain eligible corporate stockholders, dividends that were eligible for the dividends received deduction.

(2)For the years ended December 31, 2024, 2023 and 2022, the percentage of total dividends paid that constituted interest-related dividends were 88.6%, 80.5% and 76.6%, respectively.

The following reconciles net increase in stockholders’ equity resulting from operations to taxable income for the years ended December 31, 2024, 2023 and 2022:

 For the Years Ended December 31,
 202420232022
 (Estimated)(1)
Net increase in stockholders’ equity resulting from operations$1,522 $1,522 $600 
Adjustments:
Net realized (losses) gains on investments, foreign currency and other transactions(136)(440)525 
Income not currently taxable(2)(203)(157)(232)
Income for tax but not book233 60 90 
Expenses not currently deductible76 21 56 
Realized gain/loss differences(3)17 60 (101)
Taxable income$1,509 $1,066 $938 
_______________________________________________________________________________

(1)The calculation of estimated 2024 U.S. federal taxable income is based on certain estimated amounts, including information received from third parties and, as a result, actual 2024 U.S. federal taxable income will not be finally determined until the Company’s 2024 U.S. federal tax return is filed in 2025 (and, therefore, such estimate is subject to change).

(2)Includes a reduction for dividend income from preferred equity that is not taxable until collected totaling $257, $198 and $175, respectively, net of dividend income collected of $33, $11 and $71, respectively, for the years ended December 31, 2024, 2023 and 2022, respectively.

(3)Certain realized gain/loss differences are the result of the realization of certain tax only capital losses on the investments and liabilities acquired in the acquisition of Allied Capital Corporation in April 2010 (the “Allied Acquisition”). Because the Allied Acquisition was a “tax-free” reorganization under the Code, realized losses for tax purposes can differ from GAAP. Note that unlike the Allied Acquisition, the acquisition of American Capital, Ltd. in January 2017 was treated as a taxable purchase of the American Capital assets for purposes of the Company’s taxable
income calculations; therefore, realized gains or losses for tax purposes are generally consistent with realized gains or losses under GAAP.

Taxable income generally differs from net increase in stockholders’ equity resulting from operations for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses, and generally excludes net unrealized gains or losses, as unrealized gains or losses are generally not included in taxable income until they are realized. In addition, on April 1, 2010, the Company acquired Allied Capital Corporation in a “tax-free” merger under the Code, which has caused certain merger-related items to vary in their deductibility for GAAP and tax purposes.

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. As of December 31, 2024, the Company estimates that it will have a capital loss carryforward of approximately $242 available for use in later tax years. While the Company’s ability to utilize losses in the future depends on a variety of factors that cannot be known in advance, approximately $92 of the capital loss carryforwards will be subject to limitations under Section 382 of the Code. The unused balance will be carried forward and utilized as gains are realized, subject to such limitations.

For the year ended December 31, 2024, the Company estimated U.S. federal taxable income exceeded its distributions made from such taxable income during the year; consequently, the Company has elected to carry forward the excess for distribution to stockholders in 2025. The amount carried forward to 2025 is estimated to be approximately $922, substantially all of which is expected to be ordinary income, although these amounts will not be finalized until the 2024 tax returns are filed in 2025. For the years ended December 31, 2023 and 2022, the Company had taxable income in excess of the distributions made from such taxable income during the year, and therefore, the Company elected to carry forward the excess for distribution to stockholders in 2024 and 2023, respectively. The amounts carried forward to 2024 and 2023 were $631 and $646, respectively. To the extent that the Company determines that its estimated current year annual taxable income will exceed its estimated current year dividends from such taxable income, the Company accrues excise tax on estimated excess taxable income. For the years ended December 31, 2024, 2023 and 2022, a net expense of $35, $23 and $30, respectively, was recorded for U.S. federal excise tax. The net expense for the years ended December 31, 2024 and 2023 each included a reduction in expense related to an expected refund request arising from the overpayment of the prior year’s excise tax of $1 and $2, respectively.

As of December 31, 2024, the estimated cost basis of investments for U.S. federal tax purposes was $26.5 billion resulting in estimated gross unrealized gains and losses of $1.7 billion and $1.5 billion, respectively. As of December 31, 2023, the estimated cost basis of investments for U.S. federal tax purposes was $22.5 billion resulting in estimated gross unrealized gains and losses of $1.3 billion and $1.7 billion, respectively. As of December 31, 2024, the cost of investments for U.S. federal tax purposes was less than the amortized cost of investments for book purposes of $26.4 billion. As of December 31, 2023, the cost of investments for U.S. federal tax purposes was less than the amortized cost of investments for book purposes of $22.7 billion.

The Company may adjust the classification of stockholders’ equity as a result of permanent book-to-tax differences, which may include merger-related items, differences in the book and tax basis of certain assets and liabilities, and nondeductible federal taxes (including excise taxes), among other items. These adjustments are reclassifications among the individual components of stockholders’ equity and have no effect on total stockholders’ equity. For the year ended December 31, 2024, the Company decreased capital in excess of par value by $87 and increased accumulated undistributed/ (overdistributed) earnings by $87 in the consolidated statement of stockholders’ equity. After adjusting for these reclassifications, the capital in excess of par value, accumulated undistributed net investment income, accumulated net realized losses and accumulated net unrealized gains were $12,502, $921, $(316) and $247, respectively. The adjustments made for the year ended December 31, 2024 are based on certain estimated amounts and assumptions and, as a result, such adjustments are subject to change until the Company’s 2024 U.S. federal tax return is filed in 2025. For the year ended December 31, 2023, the Company decreased capital in excess of par value by $20 and increased accumulated undistributed/(overdistributed) earnings by $20 in the consolidated statement of stockholders’ equity. After adjusting for these reclassifications, the capital in excess of par value, accumulated undistributed net investment income, accumulated net realized losses and accumulated net unrealized gains were $10,738, $659, $(256) and $59, respectively.

Certain of the Company’s consolidated subsidiaries are subject to U.S. federal and state income taxes. For the years ended December 31, 2024, 2023 and 2022, the Company recorded a net tax expense (benefit) of approximately $38, $(3) and $25, respectively, for these subsidiaries.