INCOME TAXES (Tables)

9 Months Ended

Dec. 31, 2023

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 years ended December 31, 2023 and 2022, 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,
	2023		2022
Additional capital	$	(5,277)	$	(5,126)
Total distributable earnings	5,277		5,126

Schedule of Distributions

The tax character of distributions paid for the tax years ended December 31, 2023 and 2022 was as follows (amounts in thousands):


	Twelve Months Ended December 31,
	2023		2022
Ordinary income	$	94,139	$	60,960
Distributions of long term capital gains	—		—
Distributions on tax basis1	$	94,139	$	60,960

1Includes only those distributions which reduce estimated taxable income.

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, 2023 and 2022:


	Nine Months Ended December 31,
Reconciliation of RIC Distributable Income1	2023		2022
Net increase in net assets from operations	$	69,920	$	14,917
Net unrealized (appreciation) depreciation on investments	(9,906)		13,989
(Expense/loss) income/gain recognized for tax on pass-through entities	(4,123)		10
(Gain) loss recognized on dispositions	(2,824)		(1,473)
Capital loss carryover2	24,429		14,454
Net operating (income) loss - wholly-owned subsidiary	(4,931)		1,071
Dividend income from wholly-owned subsidiary	—		1,068
Non-deductible tax expense	640		466
Loss on extinguishment of debt	(2,045)		(2,045)
Non-deductible compensation	2,772		2,443
Compensation related book/tax differences	(466)		(1,471)
Interest on non-accrual loans	3,959		2,924
Other book/tax differences	3,580		960
Estimated distributable income before deductions for distributions	$	81,005	$	47,313

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, 2023, the Company had long-term capital loss carryforwards of $58.0 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, 2023 and March 31, 2023 (amounts in thousands):


	December 31, 2023		March 31, 2023
Deferred tax asset:
Net operating loss carryforwards	$	159	$	—
Interest	966		219
Total deferred tax asset	1,125		219
Deferred tax liabilities:
Net unrealized appreciation on investments	(10,402)		(11,413)
Net basis differences in portfolio investments	(1,648)		(923)
Total deferred tax liabilities	(12,050)		(12,336)
Total net deferred tax (liabilities) assets	$	(10,925)	$	(12,117)

Schedule of Significant Components of Income Tax Provision

The following table sets forth the significant components of income tax provision as of December 31, 2023 and 2022 (amounts in thousands):


	Nine Months Ended December 31,
Components of Income Tax Provision	2023		2022

Excise tax	$	590	$	468

Tax (benefit) provision related to Taxable Subsidiary	(69)		(488)

Other	50		—
Total income tax provision	$	571	$	(20)