INCOME TAXES (Tables)

9 Months Ended

Dec. 31, 2022

Book and Tax Basis Differences Relating to Dividends and Distributions

Book and tax basis differences relating to dividends and distributions to our shareholders and other permanent book and tax differences are typically reclassified among the CSWC’s capital accounts. In addition, the character of income and gains to be distributed is determined in accordance with income tax regulations that may differ from U.S. GAAP; accordingly, for the nine months ended December 31, 2022 and 2021, CSWC reclassified for book purposes amounts arising from permanent book/tax differences related to the tax treatment of return of capital and/or deemed distributions, tax treatment of investments upon disposition, and non-deductible expenses, as follows (amounts in thousands):


	Nine Months Ended December 31,
	2022		2021
Additional capital	$	(5,126)	$	(6,255)
Total distributable earnings	5,126		6,255

Schedule of Distributions

The tax character of distributions paid for the years ended December 31, 2022 and 2021 was as follows (amounts in thousands):


	Twelve Months Ended December 31,
	2022		2021
Ordinary income	$	60,960	$	56,633
Distributions of long term capital gains	—		—
Distributions on tax basis	$	60,960	$	56,633

Schedule of Net Assets Resulting from Operations to Estimated RIC Taxable Income

The following reconciles net increase in net assets resulting from operations to estimated RIC taxable income for the nine months ended December 31, 2022 and 2021:


	Nine Months Ended December 31,
Reconciliation of RIC Distributable Income1	2022		2021
Net increase in net assets from operations	$	14,917	$	23,146
Net unrealized depreciation (appreciation) on investments	13,989		(4,306)
Income/gain (expense/loss) recognized for tax on pass-through entities	10		1,558
(Gain) loss recognized on dispositions	(1,473)		329
Capital loss carryover2	14,454		308
Net operating income - wholly-owned subsidiary	1,071		(9,186)
Dividend income from wholly-owned subsidiary	1,068		—
Non-deductible tax expense	466		191
Loss on extinguishment of debt	—		12,950
Non-deductible compensation	2,443		2,688
Compensation related book/tax differences	(1,471)		2,542
Other book/tax differences	1,839		3,518
Estimated distributable income before deductions for distributions	$	47,313	$	33,738

1The calculation of taxable income for each period is an estimate and will not be finally determined until the Company files its tax return each year. Final taxable income may be different than this estimate.

2At December 31, 2022, the Company had long-term capital loss carryforwards of $31.9 million to offset future capital gains. These capital loss carryforwards are not subject to expiration.

Schedule of Deferred Tax Assets and Liabilities

The following table sets forth the significant components of the deferred tax assets and liabilities as of December 31, 2022 and March 31, 2022 (amounts in thousands):


	December 31, 2022		March 31, 2022
Deferred tax asset:
Net operating loss carryforwards	$	—	$	—
Interest	220		185
Total deferred tax asset	220		185
Deferred tax liabilities:
Net unrealized appreciation on investments	(10,911)		(4,899)
Net basis differences in portfolio investments	(736)		(1,033)
Total deferred tax liabilities	(11,647)		(5,932)
Total net deferred tax (liabilities) assets	$	(11,427)	$	(5,747)

Schedule of Significant Components of Income Tax Provision

The following table sets forth the significant components of income tax provision as of December 31, 2022 and 2021 (amounts in thousands):


	Nine Months Ended December 31,
Components of Income Tax Provision	2022		2021
Excise tax	$	468	$	191
Tax (benefit) provision related to Taxable Subsidiary	(488)		457
Total income tax (benefit) provision	$	(20)	$	648