Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes (Tables)

v3.25.4
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Schedule of Differences Reclassified for Tax Purposes

The following differences were reclassified for tax purposes for the years ended December 31, 2025 and December 31, 2024:

 

 

2025

 

 

2024

 

Increase (decrease) in capital in excess of par value

 

$

11,653

 

 

$

(381,550

)

(Decrease) increase in total distributable earnings

 

 

(11,653

)

 

 

381,550

 

Schedule of Reconciliation of Net Increase in Net Assets Resulting From Operations to Taxable Income

The following table reconciles the net (decrease) increase in net assets resulting from operations to taxable income for the years ended December 31, 2025 and December 31, 2024:

 

 

2025

 

 

2024

 

Net (decrease) increase in net assets resulting from operations

 

$

(8,039,620

)

 

$

8,827,612

 

Net change in unrealized depreciation on investments

 

 

11,327,218

 

 

 

5,722,329

 

Net change in deferred tax asset/liability

 

 

(45,348

)

 

 

376,989

 

GAAP versus tax basis consolidation of subsidiaries

 

 

(5,834

)

 

 

(32,936

)

Other permanent book income and tax income differences

 

 

40,997

 

 

 

37,498

 

Temporary book income and tax income differences

 

 

(265,829

)

 

 

(2,270,112

)

Capital loss carryforward

 

 

2,001,997

 

 

 

 

Taxable income

 

$

5,013,581

 

 

$

12,661,380

 

Schedule of Tax Character of Distributions Paid and Deemed Paid The tax character of distributions paid and deemed paid during the years ended December 31, 2025 and December 31, 2024 was as follows:

 

 

 

2025

 

 

2024

 

Ordinary income

 

$

5,109,447

 

 

$

3,427,968

 

Long-term capital gains

 

 

 

 

 

9,554,568

 

Return of Capital

 

 

 

 

 

 

Total

 

$

5,109,447

 

 

$

12,982,536

 

Schedule of Components of Distributable Earnings/(Accumulated Losses) and Reconciliation to Accumulated Earnings/(Deficit)

The tax basis components of distributable earnings (accumulated losses) and reconciliation to accumulated earnings (deficit) on a book basis for the years ended December 31, 2025 and December 31, 2024 were as follows:

 

 

2025

 

 

2024

 

Undistributed ordinary income – tax basis

 

$

94,001

 

 

$

11,649

 

Capital loss carryforwards

 

 

(2,001,997

)

 

 

 

Unrealized (depreciation) appreciation on investments

 

 

(8,579,105

)

 

 

3,843,912

 

Other temporary differences

 

 

(129,769

)

 

 

(1,313,179

)

Total accumulated (deficit) earnings – book basis

 

$

(10,616,870

)

 

$

2,542,382

 

Schedule of Net Deferred Tax Asset

The tax effect of the major temporary differences and carryforwards that give rise to the Corporation’s net deferred tax asset at December 31, 2025 and 2024 are approximately as follows:

 

 

 

2025

 

 

2024

 

Investments

 

$

(1,274,963

)

 

$

(635,300

)

NOL & tax credit carryforwards, net of valuation allowance

 

 

1,274,963

 

 

 

637,461

 

Deferred tax asset, net

 

$

 

 

$

2,161

 

Schedule of Components of Valuation Allowance The components of the valuation allowance against the Corporation’s U.S. deferred tax assets are as follows at December 31:

 

 

 

2025

 

 

2024

 

Federal

 

$

316,680

 

 

$

363,471

 

State, net of federal benefit

 

 

26,590

 

 

 

 

Total

 

$

343,270

 

 

$

363,471

 

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense (benefit) reported in the consolidated statements of operations are as follows for the years ended December 31:

 

 

 

2025

 

 

2024

 

 

2023

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

41,315

 

 

$

(85,356

)

 

$

609,056

 

State

 

 

1,343

 

 

 

5,292

 

 

 

58,320

 

 

 

42,658

 

 

 

(80,064

)

 

 

667,376

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

(6,837

)

 

 

62,619

 

 

 

(13,797

)

State

 

 

8,998

 

 

 

(25,600

)

 

 

2,778

 

 

 

2,161

 

 

 

37,019

 

 

 

(11,019

)

Total

 

$

44,819

 

 

$

(43,045

)

 

$

656,357

 

Summary of Income Taxes Paid (Net of Refunds)

Income taxes paid (net of refunds) by jurisdiction type are as follows for the years ended December 31:

 

 

 

2025

 

 

2024

 

 

2023

 

Federal

 

$

37,388

 

 

$

80,437

 

 

$

602,903

 

State

 

 

(40,514

)

 

 

40,996

 

 

 

42,345

 

Total income taxes paid (net of refunds)

 

 

(3,126

)

 

 

121,433

 

 

 

645,248

 

 

Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions for the years ended December 31:

 

 

 

2025

 

 

2024

 

 

2023

California

 

$

2,500

 

 

$ *

 

 

$ *

Massachusetts

 

 

1,427

 

 

*

 

 

*

South Carolina

 

 

(6,052

)

 

*

 

 

*

Georgia

 

 

(6,988

)

 

*

 

 

*

Utah

 

 

(14,633

)

 

 

(6,088

)

 

*

New Jersey

 

 

(17,468

)

 

 

16,000

 

 

*

Pennsylvania

 

*

 

 

 

28,931

 

 

*

Nebraska

 

*

 

 

 

(8,000

)

 

*

* Jurisdiction below the 5 percent threshold for the period presented

Schedule of Reconciliation of the Expense (Benefit) From Income Taxes at the Federal Statutory Rate

A reconciliation of the expense (benefit) from income taxes at the federal statutory rate to the expense reported is as follows for the years ended December 31:

 

 

2025

 

 

2024

 

 

2023

 

 

 

Amount

 

 

%*

 

 

Amount

 

 

%*

 

 

Amount

 

 

%*

 

Net investment income, realized (loss) gain and unrealized (loss) gain before income taxes

 

$

(7,994,801

)

 

 

 

 

$

8,784,567

 

 

 

 

 

$

7,183,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected tax (benefit) expense at statutory rate

 

 

(1,678,908

)

 

 

21.0

%

 

 

1,844,759

 

 

 

21.0

%

 

 

1,508,431

 

 

 

21.0

%

Change in valuation allowance

 

 

(46,791

)

 

 

0.6

%

 

 

232,133

 

 

 

2.6

%

 

 

131,338

 

 

 

1.8

%

Tax benefit of RIC status

 

 

1,727,991

 

 

 

(21.6

%)

 

 

(2,169,298

)

 

 

(24.7

%)

 

 

(1,067,238

)

 

 

(14.9

%)

RIC excise tax expense

 

 

40,997

 

 

 

(0.5

%)

 

 

37,388

 

 

 

0.4

%

 

 

52,800

 

 

 

0.7

%

Other

 

 

1,530

 

 

 

(0.0

%)

 

 

11,973

 

 

 

0.1

%

 

 

31,026

 

 

 

0.4

%

Total

 

$

44,819

 

 

 

(0.6

%)

 

$

(43,045

)

 

 

(0.5

%)

 

$

656,357

 

 

 

9.1

%

* Percentages may not foot due to rounding

The primary driver of the difference between the U.S. federal statutory rate and the effective tax rate is the Corporation’s election to be treated as a RIC. Other reconciling items primarily relate to Federal excise tax and changes in valuation allowances associated with taxable subsidiary entities.