NOTE 12 – INCOME TAXES

The Company has elected to be treated as a RIC under Subchapter M of the Code, and as a result must distribute substantially all of its taxable income. Accordingly, no provision for federal income tax has been made in the consolidated financial statements.

The Company distributed 100% of its taxable income in each of its fiscal and taxable years.

Distributions from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal tax regulations, which may differ from amounts determined in accordance with GAAP and those differences could be material. These book-to-tax differences are either temporary or permanent in nature. Reclassifications due to permanent book-tax differences have no impact on net assets. Such reclassifications have been reflected in the consolidated statements of changes in net assets.

The reconciliation of net increase in net assets resulting from operations to taxable income is as follows:

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The tax character of distributions was as follows:

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The Company may make certain adjustments to the classification of stockholders’ equity as a result of permanent book-to-tax differences. During the current fiscal year, permanent differences primarily due to nondeductible federal taxes resulted in a net increase in accumulated undistributed net investment income and a net decrease in paid-in capital.

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

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There were no late year ordinary losses for the fiscal years ended December 31, 2024, December 31, 2023 and December 31, 2022.

For tax purposes, net capital losses may be carried over to offset future capital gains, if any. The Company is permitted to carry forward capital losses incurred for an unlimited period, and such losses will retain their character as either short-term or long-term capital losses. As of December 31, 2024 and 2023, the Company had $22,269 and $8,123, respectively of long-term capital loss carryforwards. As of December 31, 2024 and 2023, the Company had $5,666 and zero, respectively of short-term capital loss carryforwards.

As of December 31, 2024, the cost of investments for U.S. federal income tax purposes was $711,668, resulting in net unrealized depreciation of $56,206. This is comprised of gross unrealized appreciation of $13,700 and gross unrealized depreciation of $69,906 on a tax basis. As of December 31, 2023, the cost of investments for U.S. federal income tax purposes was $751,117, resulting in net unrealized depreciation of $54,949. This is comprised of gross unrealized appreciation of $6,881 and gross unrealized depreciation of $61,830 on a tax basis.

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 period presented herein. Although the Company files federal and state tax returns, its major tax jurisdiction is federal. Tax returns for each of the federal tax years since 2020 remain subject to examination by the Internal Revenue Service.