New Mountain Finance CorpNMFC
New Mountain Finance Corp Income Taxes Disclosure
Distributions
Differences between taxable income and the results of operations for financial reporting purposes may be permanent or temporary in nature. Such differences may include differences in the treatment of short-term gains as ordinary for tax purposes, return of capital, dividend re-designations and the timing of the deductibility of certain business expenses, as applicable. To the extent these differences are permanent in nature, they are charged or credited to additional paid-in capital, undistributed net investment income or undistributed net realized gains on investments, as appropriate. During the years ended December 31, 2025, December 31, 2024 and December 31, 2023, the Company's reclassifications of amounts for book purposes arising from permanent book/tax differences were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Undistributed net investment income | $ | (674) | $ | (3,297) | $ | (5,367) | |||||||||||
| Distributions in excess of net realized gains | — | — | 898 | ||||||||||||||
| Additional paid-in-capital | 674 | 3,297 | 4,469 | ||||||||||||||
For U.S. federal income tax purposes, distributions deemed paid to stockholders of the Company are reported as ordinary income, return of capital, long term capital gains or a combination thereof. The tax character of distributions deemed paid by the Company for the years ended December 31, 2025, December 31, 2024 and December 31, 2023 were estimated to be as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Ordinary income (non-qualified) | $ | 124,806 | $ | 114,693 | $ | 140,397 | |||||||||||
| Ordinary income (qualified) | — | — | 10,340 | ||||||||||||||
| Capital gains | — | — | — | ||||||||||||||
| Return of capital | 11,798 | 35,799 | — | ||||||||||||||
| Total | $ | 136,604 | $ | 150,492 | $ | 150,737 | |||||||||||
As of December 31, 2025, December 31, 2024 and December 31, 2023, the costs of investments for the Company for tax purposes were $2,741,208, $2,978,976 and $2,927,312, respectively.
| December 31, 2025(1)(2) | December 31, 2024(1)(2) | December 31, 2023(1)(2) | |||||||||||||||
| Tax cost | $ | 2,741,208 | $ | 2,978,976 | $ | 2,927,312 | |||||||||||
| Gross unrealized appreciation on investments | 284,487 | 562,558 | 466,794 | ||||||||||||||
| Gross unrealized depreciation on investments | (270,182) | (437,010) | (366,284) | ||||||||||||||
| Total investments at fair value | $ | 2,755,513 | $ | 3,104,524 | $ | 3,027,822 | |||||||||||
(1)Includes securities purchased under collateralized agreement to resell.
(2)Excludes investments attributable to non-controlling interest in NMNLC.
At December 31, 2025, December 31, 2024 and December 31, 2023, the components of distributable earnings on a tax basis differ from the amounts reflected per the Company's Consolidated Statements of Assets and Liabilities by temporary book/tax differences primarily arising from differences between the tax and book basis of the Company's investment in securities held directly as well as through undistributed income.
As of December 31, 2025, December 31, 2024 and December 31, 2023, the Company's components of accumulated earnings (deficit) on a tax basis were as follows:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Accumulated capital loss carryforwards | $ | (106,521) | $ | (113,250) | $ | (84,427) | |||||||||||
| Other temporary differences | 6,131 | 6,179 | 6,986 | ||||||||||||||
| Undistributed ordinary income | — | — | 4,522 | ||||||||||||||
| Unrealized depreciation (appreciation) | (21,286) | 93,479 | 60,575 | ||||||||||||||
| Total | $ | (121,676) | $ | (13,592) | $ | (12,344) | |||||||||||
The Company is subject to a 4.0% nondeductible U.S. federal excise tax on certain undistributed income unless the Company distributes, in a timely manner as required by the Code, an amount at least equal to the sum of (1) 98.0% of its net ordinary income earned for the calendar year and (2) 98.2% of its capital gain net income for the one-year period ending October 31 in the calendar year. For the year ended December 31, 2025, the Company does not expect to incur any excise taxes. For the years ended December 31, 2024 and December 31, 2023, the Company did not incur any excise taxes.
The following information is hereby provided with respect to distributions declared during the calendar years ended December 31, 2025, December 31, 2024 and December 31, 2023:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Distributions per share | $ | 1.28 | $ | 1.37 | $ | 1.49 | |||||||||||
| Ordinary dividends | 91.36 | % | 75.68 | % | 93.14 | % | |||||||||||
| Long-term capital gains | — | % | — | % | — | % | |||||||||||
| Qualified dividend income | — | % | — | % | 6.86 | % | |||||||||||
| Dividends received deduction | — | % | — | % | 6.86 | % | |||||||||||
| Interest-related dividends(1) | 84.62 | % | 71.22 | % | 88.43 | % | |||||||||||
| Qualified short-term capital gains(1) | — | % | — | % | — | % | |||||||||||
| Return of capital | 8.64 | % | 24.32 | % | — | % | |||||||||||
(1) Represents the portion of the taxable ordinary dividends eligible for exemption from U.S. withholding tax for
nonresident aliens and foreign corporations.
Dividends and distributions that were reinvested through the Company’s dividend reinvestment plan are treated, for tax purposes, as if they had been paid in cash. Therefore, stockholders who participated in the dividend reinvestment plan should also refer to the information as provided in the table above.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.