Distributions

12 Months Ended

Dec. 31, 2022

The following table reflects the cash distributions per share that the Company has declared on its common stock during the years ended December 31, 2022, 2021 and 2020:


	Distribution
For the Year Ended December 31,	Per Share		Amount
2020(1)	$	2.56	$	318
2021	$	2.47	$	511
2022	$	2.66	$	754

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(1)The amount of per share distributions has been retroactively adjusted to reflect the Reverse Stock Split as discussed above in Note 3.

On February 21, 2023, the Company's board of directors declared a regular quarterly cash distribution of $0.70 per share, which will be paid on or about April 3, 2023 to stockholders of record as of the close of business on March 15, 2022. The timing and amount of any future distributions to stockholders are subject to applicable legal restrictions and the sole discretion of the Company’s board of directors.

Pursuant to the DRP, the Company will reinvest all cash dividends or distributions declared by the Company’s board of directors on behalf of stockholders who do not elect to receive their distributions in cash. As a result, if the Company’s board of directors declares a distribution, then stockholders who have not elected to “opt out” of the DRP will have their distributions automatically reinvested in additional shares of the Company’s common stock.

With respect to each distribution pursuant to the DRP, the Company reserves the right to either issue new shares of common stock or purchase shares of common stock in the open market in connection with implementation of the DRP. Unless the Company, in its sole discretion, otherwise directs the plan administrator, (A) if the per share market price (as defined in the DRP) is equal to or greater than the estimated net asset value per share (rounded up to the nearest whole cent) of the Company’s common stock on the payment date for the distribution, then the Company will issue shares of common stock at the greater of (i) net asset value per share of common stock or (ii) 95% of the market price; or (B) if the market price is less than the net asset value per share, then, in the sole discretion of the Company, (i) shares of common stock will be purchased in open market transactions for the accounts of participants to the extent practicable, or (ii) the Company will issue shares of common stock at net asset value per share. Pursuant to the terms of the DRP, the number of shares of common stock to be issued to a participant will be determined by dividing the total dollar amount of the distribution payable to a participant by the price per share at which the Company issues such shares; provided, however, that shares purchased in open market transactions by the plan administrator will be allocated to a participant based on the average purchase price, excluding any brokerage charges or other charges, of all shares of common stock purchased in the open market.

If a stockholder receives distributions in the form of common stock pursuant to the DRP, such stockholder generally will be subject to the same federal, state and local tax consequences as if it elected to receive distributions in cash. If the Company’s common stock is trading at or below net asset value, a stockholder receiving distributions in the form of additional common stock will be treated as receiving a distribution in the amount of cash that they would have received if they had elected to receive the distribution in cash. If the Company’s common stock is trading above net asset value, a stockholder receiving distributions in the form of additional common stock will be treated as receiving a distribution in the amount of the fair market value of the Company’s common stock. The stockholder’s basis for determining gain or loss upon the sale of common stock received in a distribution will be equal to the total dollar amount of the distribution payable to the stockholder. Any stock received in a distribution will have a holding period for tax purposes commencing on the day following the day on which the shares of common stock are credited to the stockholder’s account.

The Company may fund its cash distributions to stockholders from any sources of funds legally available to it, including proceeds from the sale of shares of the Company's common stock, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, and dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies. The Company has not established limits on the amount of funds it may use from available sources to make distributions. During certain periods, the Company’s distributions may exceed its earnings. As a result, it is possible that a portion of the distributions the Company makes may represent a return of capital. A return of capital generally is a return of a stockholder’s investment rather than a return of earnings or gains derived from the Company’s investment activities. Each year a statement on Form 1099-DIV identifying the sources of the distributions (i.e., paid from ordinary income, paid from net capital gains on the sale of securities, and/or a return of capital, which is a nontaxable distribution) will be mailed to the Company’s stockholders. There can be no assurance that the Company will be able to pay distributions at a specific rate or at all.

The following table reflects the sources of the cash distributions on a tax basis that the Company has paid on its common stock during the years ended December 31, 2022, 2021 and 2020:


	Year Ended December 31,
	2022				2021				2020
Source of Distribution	Distribution Amount		Percentage		Distribution Amount		Percentage		Distribution Amount		Percentage
Offering proceeds	$	—	—		$	—	—		$	—	—
Borrowings	—		—		—		—		—		—
Net investment income(1)	754		100	%	511		100	%	318		100	%
Short-term capital gains proceeds from the sale of assets	—		—		—		—		—		—
Long-term capital gains proceeds from the sale of assets	—		—		—		—		—		—
Non-capital gains proceeds from the sale of assets	—		—		—		—		—		—
Distributions on account of preferred and common equity	—		—		—		—		—		—
Total	$	754	100	%	$	511	100	%	$	318	100	%

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(1)During the years ended December 31, 2022, 2021 and 2020, 85.5%, 84.6% and 88.1%, respectively, of the Company's gross investment income was attributable to cash income earned, 4.5%, 5.5% and 1.6%, respectively, was attributable to non-cash accretion of discount and 10.0%, 9.9% and 10.3%, respectively, was attributable to paid-in-kind, or PIK, interest.

The Company’s net investment income on a tax basis for the years ended December 31, 2022, 2021 and 2020 was $861, $557 and $357, respectively. As of December 31, 2022, 2021 and 2020, the Company had $446, $284 and $244, respectively, of undistributed net investment income and $2,036, $1,705 and $855, respectively, of accumulated capital losses on a tax basis.

The Company’s undistributed net investment income on a tax basis may be adjusted following the filing of the Company’s tax returns. The adjustment is in general due to tax-basis income received by the Company differing from GAAP-basis income on account of certain collateralized securities and interests in partnerships, and the reclassification of realized gains and losses upon the sale of certain collateralized securities held in its investment portfolio during such period.

The difference between the Company’s GAAP-basis net investment income and its tax-basis net investment income is primarily due to the reclassification of unamortized original issue discount and prepayment fees recognized upon prepayment of loans from income for GAAP purposes to realized gains or deferred to future periods for tax purposes, the impact of consolidating certain subsidiaries for purposes of computing GAAP-basis net investment income but not for purposes of computing tax-basis net investment income, the reversal of non-deductible excise taxes and income recognized for tax purposes on certain transactions but not recognized for GAAP purposes.

The following table sets forth a reconciliation between GAAP-basis net investment income and tax-basis net investment income during the years ended December 31, 2022, 2021 and 2020:


	Year Ended December 31,
	2022		2021		2020
GAAP-basis net investment income	$	865	$	584	$	331


Income subject to tax not recorded for GAAP	23		10		29
GAAP accretion from merger not recognized for tax	(50)		(47)		—
Excise taxes	19		12		10
GAAP versus tax-basis impact of consolidation of certain subsidiaries	5		12		11
Reclassification of unamortized original issue discount and prepayment fees	(27)		(37)		(14)
Other miscellaneous differences	26		23		(10)
Tax-basis net investment income	$	861	$	557	$	357

The Company may make certain adjustments to the classification of stockholders' equity as a result of permanent book-to-tax differences. During the year ended December 31, 2022, the Company increased accumulated undistributed (distributions in excess of)

net investment income and capital in excess of par value by $47 and $8, respectively, and decreased accumulated undistributed net realized gain (loss) on investments and gain (loss) on foreign currency by $55. During the year ended December 31, 2021, the Company increased accumulated undistributed (distributions in excess of) net investment income and accumulated undistributed net realized gain (loss) on investments and gain (loss) on foreign currency by $47 and $2,115, respectively, and decreased capital in excess of par value by $2,162.

The determination of the tax attributes of the Company’s distributions is made annually as of the end of the Company’s fiscal year based upon the Company’s taxable income for the full year and distributions paid for the full year. The actual tax characteristics of distributions to stockholders are reported to stockholders annually on Form 1099-DIV.

As of December 31, 2022 and 2021, the components of accumulated earnings on a tax basis were as follows:


	Year Ended December 31,
	2022		2021
Distributable ordinary income	$	446	$	284
Distributable realized gains (accumulated capital losses)(1)	(2,036)		(1,881)


Other temporary differences	7		(1)
Net unrealized appreciation (depreciation)(2)	(1,015)		(330)
Total	$	(2,598)	$	(1,928)

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(1)Net capital losses may be carried forward indefinitely, and their character is retained as short-term or long-term losses. As of December 31, 2022, the Company had capital loss carryforwards available to offset future realized capital gains of approximately $2,036 million. $85 of such losses were carried over from CCT due to the 2018 Merger, $1,212 were carried over from FSKR due to the 2021 Merger, and $177 of such losses were carried over from losses generated by the Company prior to the 2018 Merger. Because of the loss limitation rules of the Code, some of the tax basis losses may be limited in their use. Any unused balances resulting from such limitations may be carried forward into future years indefinitely.

(2)As of December 31, 2022 and 2021, the gross unrealized appreciation was $1,349 and $1,665, respectively. As of December 31, 2022 and 2021, the gross unrealized depreciation was $2,364 and $1,995, respectively.

The aggregate cost of the Company’s investments for U.S. federal income tax purposes totaled $17,159 and $17,167 as of December 31, 2022 and 2021, respectively. The aggregate net unrealized appreciation (depreciation) on a tax basis was $(1,782) and $(1,066) as of December 31, 2022 and 2021, respectively. The aggregate net unrealized appreciation (depreciation) on investments on a tax basis excludes net unrealized appreciation (depreciation) from merger accounting, cross currency swaps, foreign currency forward contracts and foreign currency transactions.

As of December 31, 2022, the Company had a deferred tax liability of $10 resulting from unrealized appreciation on investments held by the Company’s wholly-owned taxable subsidiaries and a deferred tax asset of $57 resulting from a combination of unrealized depreciation on investments held by and net operating losses and other tax attributes of the Company’s wholly-owned taxable subsidiaries. As of December 31, 2022, certain wholly-owned taxable subsidiaries anticipated that they would be unable to fully utilize their generated net operating losses, therefore the deferred tax asset was offset by a valuation allowance of $50. For the year ended December 31, 2022, the Company recorded a provision for taxes related to wholly-owned taxable subsidiaries of $3 related to the deferred tax liability and $2 related to current taxes. Each were a result of the sale of investments, during the second quarter, held in wholly-owned taxable subsidiaries.