Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Note 11. Income Taxes

The tax character of stockholder distributions attributable to the years ended December 31, 2023, 2022 and 2021, were as follows (in thousands):

	2023		2022		2021
Ordinary Income	$	67,081	$	55,288	$	48,843
Capital Gain		—		—		—
Total	$	67,081	$	55,288	$	48,843

For years ended December 31, 2023, 2022 and 2021, 84.5%, 83.8%, and 86.7%, respectively, of ordinary income qualified as interest related dividend, which is exempt from U.S. withholding tax applicable to non U.S. stockholders.

The components of distributable earnings on a tax basis detailed below differ from the amounts reflected in the Company’s Consolidated Statements of Assets and Liabilities due to temporary and permanent differences. Taxable income generally differs from net increase (decrease) in net assets resulting from operations 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. The following table shows the components of accumulated losses on a tax basis for the years ended December 31, 2023, 2022 and 2021:

	2023			2022			2021
Undistributed net investment income	$	34,975		$	15,656		$	13,350
Other temporary differences		(428	)		(437	)		(447	)
Post October loss deferrals	-				—			—
Capital loss carryover		(196,476	)		(41,134	)		(34,248	)
Unrealized appreciation (depreciation)		(61,409	)		(36,583	)		7,437
Components of tax distributable earnings at year end	$	(223,338	)	$	(62,498	)	$	(13,908	)

Note, taxable income is an estimate and is not fully determined until the Company’s tax return is filed.

The Company makes certain adjustments to the classification of stockholders’ equity as a result of permanent book-to-tax differences, which include differences in the book and tax basis of certain assets and liabilities, and nondeductible federal taxes or losses among other items. To the extent these differences are permanent, they are charged or credited to additional paid in capital, undistributed net investment income or undistributed net realized gains on investments, as appropriate.

The Company did not have any uncertain tax positions that met the recognition or measurement criteria of ASC 740-10-25, Income Taxes, nor did the Company have any unrecognized tax benefits as of the periods presented herein. Although the Company files federal and state tax returns, the Company’s major tax jurisdiction is federal. The Company’s inception-to-date federal tax returns remain subject to examination by the Internal Revenue Service. A portion of losses acquired from Alcentra Capital and First Eagle Alternative Capital BDC may be subject to limitations under the Internal Revenue Code.

Permanent differences between Investment Company Taxable Income (“ICTI”) and net investment income for financial reporting purposes are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes, partnership investments, investments in wholly-owned subsidiaries, and incentive fees. For the years ended December 31, 2023, 2022 and 2021, the Company reclassified for book purposes amounts arising from permanent book/tax differences related to the different tax treatment of foreign currency gain/(loss), defaulted bonds and non-deductible-excise tax as follows (in thousands):

	2023			2022			2021
Accumulated net realized gain (loss)	$	(161,456	)	$	(5,482	)	$	(16,849	)
Distributions in excess of Investment Company Taxable Income		(16,140	)		(3,364	)		2,837
Total	$	(177,596	)	$	(8,846	)	$	(14,012	)

The Company’s aggregate investment unrealized appreciation and depreciation for federal income tax purposes was as follows (in thousands):

		As of December 31, 2023			As of December 31, 2022
Tax Cost		$	1,639,709		$	1,295,847
Gross Unrealized Appreciation		$	374		$	9,274
Gross Unrealized Depreciation			(57,314	)		(42,164	)
	Net Unrealized Investment Appreciation (Depreciation)	$	(56,940	)	$	(32,890	)

The Company recognized the following income taxes related to Taxable Subsidiaries and excise taxes related to the Company’s status as a RIC:

	For the years ended December 31,
		2023		2022		2021
Income tax (benefit) provision	$	31	$	-	$	-
Excise tax (benefit) provision		1,276		155		2,250
(Benefit) provision for income and excise taxes	$	1,307	$	155	$	2,250

As of December 31, 2023 and 2022, $1,296 and $657 of accrued income and excise taxes remained payable.

The Company recognized the following benefits (provisions) for taxes on realized and unrealized appreciation and depreciation on investments:

	For the years ended December 31,
		2023		2022			2021
Benefit (provision) for taxes on realized gain on    investments	$	132	$	(911	)	$	(1,177	)
Benefit (provision) for taxes on unrealized appreciation    (depreciation) on investments		901		105			(220	)
Benefit (provision) for taxes on realized and unrealized    appreciation (depreciation) on investments	$	1,033	$	(806	)	$	(1,397	)

As of December 31, 2023 and 2022, $114 and $91, respectively, was included in deferred tax assets on the Consolidated Statements of Assets and Liabilities relating to net operating loss carryforwards and unrealized losses on investments and other temporary book to tax differences that are expected to be used in future periods. As of December 31, 2023 and 2022, $578 and $899, respectively, was included in deferred tax liabilities on the Consolidated Statements of Assets and Liabilities primarily relating to deferred taxes on unrealized gains on investments held in the Company’s corporate subsidiaries and other temporary book to tax differences of the corporate subsidiaries.