v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
9.
Income Taxes

The Company has elected to be regulated as a BDC under the 1940 Act and also has elected to be treated as a RIC under the Code and has made such an election beginning with the taxable year ending December 31, 2022. So long as the Company maintains its status as a RIC, it will generally not pay corporate-level U.S. Federal income or excise taxes on any ordinary income or capital gains that it distributes at least annually to its Unitholders as dividends. The Company evaluates tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

Federal Income Taxes: It is the policy of the Company to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and distribute all of its net taxable income and any net realized gains on investments to its shareholders. Therefore, no federal income tax provision is required.

 

As of December 31, 2025, 2024, and 2023, the Company’s aggregate investment unrealized appreciation and depreciation for federal income tax purposes were as follows:

 

 

 

Year ended December 31,

 

 

2025

 

 

2024

 

 

2023

 

Cost of investments for federal income tax purposes

 

$

1,272,824

 

 

$

1,040,123

 

 

$

779,654

 

Unrealized appreciation

 

$

38,544

 

 

$

8,619

 

 

$

8,396

 

Unrealized depreciation

 

$

(60,535

)

 

$

(18,798

)

 

$

(3,687

)

Net unrealized (depreciation) appreciation on investments

 

$

(21,991

)

 

$

(10,179

)

 

$

4,709

 

The following reclassifications have been made for the permanent difference between book and tax accounting as of December 31, 2025, 2024, and 2023. These differences result primarily from net operating losses, differences in accounting for partnership interest, and amendment fees reclassified as capital gains:

 

 

 

Year ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Common Unitholders tax reclassification

 

$

—

 

 

$

—

 

 

$

—

 

Undistributed net investment (loss) income

 

$

(11,844

)

 

$

(3,136

)

 

$

(368

)

Accumulated net realized gain (loss)

 

$

11,844

 

 

$

3,136

 

 

$

368

 

 

9.
Income Taxes (continued)

 

The tax character of shareholder distributions attributable to the years ended December 31, 2025, 2024, and 2023 was as follows:

 

 

 

Year ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Ordinary income

 

$

110,917

 

 

$

84,416

 

 

$

56,137

 

Long-term capital gain

 

$

5,295

 

 

$

1,979

 

 

$

400

 

Return of capital

 

$

3,788

 

 

$

2,847

 

 

$

3,094

 

The tax components of distributable earnings on a tax basis for the years ended December 31, 2025, 2024, and 2023 were as follows:

 

 

 

Year ended December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

Net tax appreciation (depreciation)

 

$

(22,997

)

 

$

(11,290

)

 

$

3,788

 

Other cumulative effect of timing differences

 

$

(37,890

)

 

$

(22,255

)

 

$

11,579

 

As of December 31, 2025, the Company had a net long-term capital loss carryforward of $0 for federal income tax purposes, which may be carried forward indefinitely. These capital loss carryforwards are available to offset net realized gains in future years, thereby reducing future taxable gains distributions.

The Company's investment in HydroSource Logistics, LLC warrant is held through TCW DL HDR LLC, an unconsolidated special purpose vehicle. The fair value of such equity investment as of December 31, 2025 is net of a $9,965 deferred tax liability recorded by TCW DL HDR LLC. TCW DL HDR LLC accounts for income taxes under the liability method prescribed by FASB ASC 740, Accounting for Income Taxes ("ASC 740"). Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to the temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax basis.

The Company did not have any unrecognized tax benefits as of December 31, 2025 and 2024, nor were there any increases or decreases in unrecognized tax benefits for the period then ended; therefore, no interest or penalties were accrued. The Company files U.S. federal, state, local and non-U.S. tax returns, as applicable. The Company is subject to examination by the U.S federal and state tax authorities for returns filed for the prior three and four years, respectively.