Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Note 8. Income Taxes

The Company has elected to be treated as a RIC under the Code, and intends to operate in a manner so as to continue to qualify for the tax treatment applicable to RICs. As a RIC, the Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently to its shareholders as a distribution. The Company’s quarterly distributions, if any, are determined by the Board. The Company anticipates distributing substantially all of its taxable income and gains, within the Subchapter M rules, and thus the Company anticipates that it will not incur any federal or state income tax at the RIC level. As a RIC, the Company is also subject to a federal excise tax based on distributive requirements of its taxable income on a calendar year basis. Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% excise tax on such income, to the extent required.

Book and tax basis differences relating to shareholder distributions and other permanent book and tax differences are typically reclassified among the Company’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. For the year ended December 31, 2024, the Company decreased total distributable earnings by $747,703 and increased capital in excess of par value by $747,703. For the year ended December 31, 2023, the Company increased total distributable earnings by $95,093 and decreased capital in excess of par value by $95,093. The Company had no such reclassifications for the year ended December 31, 2022.

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

	Year Ended December 31,
	2024		2023		2022
Increase in net assets resulting from operations	$	19,741,835	$	29,789,927	$	16,159,975
Adjustments:
Net change in unrealized depreciation on investments		4,511,639		3,036,660		5,604,979
Other expenses not currently deductible		3,351,362		—		—
Other book-tax differences		2,604,053		95,093		—
Taxable income	$	30,208,889	$	32,921,680	$	21,764,954

The tax character of distributions paid during the years ended December 31, 2024, 2023 and 2022 were as follows:

	Year Ended December 31,
	2024		2023		2022
Ordinary income	$	29,743,979	$	32,068,284	$	21,640,954
Capital gains		—		—		—
Total distributions paid	$	29,743,979	$	32,068,284	$	21,640,954

As of December 31, 2024, 2023, and 2022, the components of distributable earnings on a tax basis were as follows:

	Year Ended December 31,
	2024			2023			2022
Undistributed net investment income	$	1,461,212		$	996,302		$	142,906
Other accumulated gains (losses)		(3,351,757	)		—			—
Other expenses not currently deductible		—			—			—
Net tax unrealized appreciation (depreciation)		(16,760,918	)		(8,897,918	)		(5,861,258	)
Total distributable earnings (deficit)	$	(18,651,463	)	$	(7,901,616	)	$	(5,718,352	)

Capital losses can be carried forward indefinitely to offset future capital gains. As of December 31, 2024, capital loss carryforward was $3,351,757. As of December 31 2023 and 2022, the Company had no capital loss carryforwards.

Taxable Subsidiaries

Certain of the Company's subsidiaries are subject to U.S. federal and state corporate-level income taxes. As of December 31, 2024 and 2023, there was deferred tax assets of $0.8 million and $0.6 million, offset by valuation allowances of $0.8 million and $0.6 million, respectively, for taxable subsidiaries. The cumulative deferred tax asset has been fully offset by a valuation allowance due to uncertainty about the Company's ability to utilize these net operating losses in future years.

ASC Topic 740 Accounting for Uncertainty in Income Taxes (“ASC 740”) provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Company’s tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions expected to be taken in the Company’s current year tax return. The Company’s inception to date tax years remain subject to examination by federal, state and local tax authorities. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an ongoing analysis of tax laws, regulations and interpretations thereof.