Income Taxes

9 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

The tax basis components of distributable earnings for the period from April 5, 2022 (Inception) through December 31, 2022 was as follows:

	From April 5, 2022 (Inception) through
	December 31, 2022
Increase in net assets resulting from    operations	$	3,847
Adjustments:
Net unrealized (gains) losses on investments		1,663
Other income (loss) for tax purposes, not book		1,211
Deferred organizational costs		(47	)
Other expenses not currently deductible		2,382
Taxable Income	$	9,056

The following reconciles increase in net assets resulting from operations for the fiscal year ended December 31, 2022 to taxable income at December 31, 2022:

	December 31, 2022
Undistributed net investment income - tax basis	$	9,056
Net unrealized gains (losses) on investments		(2,875	)
Other temporary differences		(2,088	)
Total distributable earnings - book basis	$	4,093

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

Taxable income generally differs from increase 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 Company makes certain adjustments to the classification of shareholders’ 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, or distributable earnings, as appropriate.

During the period April 5, 2022 through December 31, 2022, the Company increased distributable earnings and decreased additional paid in capital by $0.2 million which was primarily attributable to U.S. federal excise taxes.

The Company’s wholly-owned subsidiaries, Sixth Street LP Holding, LLC, and Sixth Street LP Holding II, LLC, are taxable subsidiaries in which the Company holds certain investments. Sixth Street LP Holding, LLC and Sixth Street LP Holding II, LLC are not consolidated for U.S. federal income tax purposes and may generate income tax expense as a result of its ownership of certain portfolio companies. The income tax expense, or benefit, and the related tax assets and liabilities, if any, are reflected in our Statement of Operations.

The tax cost of the Company’s investments as of December 31, 2022 was $810,241, resulting in estimated gross unrealized gains and losses of $2,806 and $5,681, respectively.

To the extent that the Company determines that its estimated current year annual taxable income will exceed its estimated current year dividends from such taxable income, the Company accrues excise tax on estimated excess taxable income. For the period from April 5, 2022 (Inception) through December 31, 2022, a net expense of $0.2 million, was recorded for U.S. federal excise tax.