Capital Southwest Announces Federal Tax Treatment of 2020 Dividends
February 03 2021 - 4:01PM
Capital Southwest Corporation (“Capital Southwest,” “CSWC” or the
“Company”) (Nasdaq: CSWC), an internally managed business
development company focused on providing flexible financing
solutions to support the acquisition and growth of middle market
businesses, announced today the tax treatment of its 2020
dividends.
Federal Tax Treatment of 2020
Dividends
Capital Southwest paid dividends totaling $2.04
per share that are attributable to the tax year ended December 31,
2020, with 100.00% of those dividends comprised of ordinary income.
Further, the ordinary income was 91.82% taxed as ordinary income
and 8.18% taxed as qualified dividends. Long-term
capital gains and qualified dividends (subject to certain
limitations) paid to non-corporate taxpayers (including
individuals) qualify for favorable tax treatment under the Internal
Revenue Code ("IRC") and, for 2020, will generally be subject to a
maximum 20% U.S. federal income tax rate (plus a 3.8% Medicare
surtax, if applicable). The Company has posted information
regarding the U.S. federal income tax characteristics of its
dividends that are attributable to 2020 on its website
(http://www.capitalsouthwest.com/tax-information).
The amounts shown in the table below represent
the final classification of the Company’s 2020 distributions. This
information supersedes any estimated information you may have
received during the year. Calendar-year 2020 distributions are
classified as follows:
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Form 1099-DIV Reporting |
Box 1a |
Box 1a and Box 1b |
Box 2a |
Non-U.S. Shareholder |
Non-U.S. Shareholder |
|
|
Record Date |
Payment Date |
Distribution per Share |
Ordinary Dividend Per Share (i) |
Qualified Dividends Per Share (i), (ii) |
Long-Term Capital Gain Per Share (iii) |
% of Interest-Related and Short-Term Capital Gain
(iv) |
% of Distributions Exempt from U.S. Withholding Tax
(v) |
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|
03/16/20 |
03/31/20 |
$ |
0.5100 |
|
$ |
0.4544 |
|
$ |
0.0556 |
|
$ |
- |
|
100.00 |
% |
100.00 |
% |
|
|
06/15/20 |
06/30/20 |
$ |
0.5100 |
|
$ |
0.4544 |
|
$ |
0.0556 |
|
$ |
- |
|
91.74 |
% |
91.74 |
% |
|
|
09/15/20 |
09/30/20 |
$ |
0.5100 |
|
$ |
0.4544 |
|
$ |
0.0556 |
|
$ |
- |
|
91.74 |
% |
91.74 |
% |
|
|
12/15/20 |
12/31/20 |
$ |
0.5100 |
|
$ |
0.5100 |
|
$ |
- |
|
$ |
- |
|
91.74 |
% |
91.74 |
% |
|
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|
$ |
2.0400 |
|
$ |
1.8732 |
|
$ |
0.1668 |
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$ |
- |
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% of Total
Dividend |
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Paid Per
Share |
|
100.000 |
% |
|
91.824 |
% |
|
8.176 |
% |
|
0.000 |
% |
93.802 |
% |
93.802 |
% |
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(i) Form 1099-DIV Box 1a includes the combined amounts of the
columns "Ordinary Dividend Per Share" and "Qualified Dividends Per
Share," contained within table above.
(ii) The portion of the dividend reported in Box
1a treated as Qualified Dividend is reported on Form 1099-DIV in
Box 1b.
(iii) Net Capital Gain Dividend is reported on
Form 1099-DIV in Box 2a.
(iv) The Company designates the above
percentages of each of the total dividends by payment date as
Interest-Related Dividend and Short-Term Capital Gain Dividend in
accordance with IRC Sections 871(k) and 881(e).
(v) The percentages designate the portion of
CSWC's dividends received by Non-U.S. Residents and Foreign
Corporation Shareholders that constitute Interest-Related
Dividends, Short-Term Capital Gains Dividends, and Net Capital Gain
Dividends to total amount of the dividends derived which generally
are exempt from United States withholding tax for these periods for
Non-U.S. Residents and Foreign Corporation Shareholders.
Non-U.S. residents and foreign corporation
shareholders ("Non-U.S. Shareholders") in a Regulated Investment
Company ("RIC") such as Capital Southwest, are exempt from U.S.
withholding tax on both "interest-related" dividends and short-term
capital gains in accordance with the IRC sections 871(k) and
881(e). In addition, Non-U.S. Shareholders in a RIC are
also exempt from U.S. withholding tax on long-term capital
gains. Approximately 93.80% of Capital
Southwest’s 2020 dividends relate to interest, short-term capital
gains and long-term capital gains. See the "Tax
Treatment of 2020 Dividends for Non-U.S. Shareholders" posted on
the Company's website for more details
(http://www.capitalsouthwest.com/tax-information).
Dividends distributed to Non-U.S. Shareholders
may have been withheld to pay U.S. federal income
tax. Non-U.S. Shareholders should contact their tax
advisor with any questions regarding this information, and its
application to any claim for refund of taxes paid to the U.S.
Internal Revenue Service.
About Capital Southwest
Capital Southwest Corporation (Nasdaq: CSWC) is
a Dallas, Texas-based, internally managed business development
company with approximately $313 million in net assets as of
December 31, 2020. Capital Southwest is a middle market lending
firm focused on supporting the acquisition and growth of middle
market businesses with $5 million to $25
million investments across the capital structure, including
first lien, unitranche, second lien, subordinated debt and
non-control equity co-investments. As a public company with a
permanent capital base, Capital Southwest has the
flexibility to be creative in its financing solutions and to invest
to support the growth of its portfolio companies over long periods
of time.
Forward-Looking Statements
This press release contains historical
information and forward-looking statements with respect to the
business and investments of Capital Southwest. Forward-looking
statements are statements that are not historical statements and
can often be identified by words such as "will," "believe,"
"expect" and similar expressions and variations or negatives of
these words. These statements are based on management's current
expectations, assumptions and beliefs. They are not guarantees of
future results and are subject to numerous risks, uncertainties and
assumptions that could cause actual results to differ materially
from those expressed in any forward-looking statement. These risks
include risks related to: changes in the markets in which Capital
Southwest invests; changes in the financial, capital, and lending
markets; regulatory changes; tax treatment and general economic and
business conditions; and uncertainties associated with the impact
from the COVID-19 pandemic, including its impact on the global and
U.S. capital markets and the global and U.S. economy, the length
and duration of the COVID-19 outbreak in the United States as well
as worldwide and the magnitude of the economic impact of that
outbreak; the effect of the COVID-19 pandemic on our business
prospects and the operational and financial performance of our
portfolio companies, including our ability and their ability to
achieve their respective objectives, and the effects of the
disruptions caused by the COVID-19 pandemic on our ability to
continue to effectively manage our business.
Readers should not place undue reliance on any
forward-looking statements and are encouraged to review Capital
Southwest's Annual Report on Form 10-K for the year ended
March 31, 2020 and subsequent filings, including the "Risk
Factors" sections therein, with the Securities and Exchange
Commission for a more complete discussion of the risks and other
factors that could affect any forward-looking statements. Except as
required by the federal securities laws, Capital Southwest does not
undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events, changing circumstances or any other reason after the
date of this press release.
Investor Relations Contact:
Michael S. Sarner, Chief Financial Officer214-884-3829
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