Capital Southwest Corporation (Nasdaq: CSWC) has released the U.S. federal income tax treatment of its 2025 dividends. The company paid dividends totaling $2.56 per share for the tax year ended December 31, 2025. This amount was composed of 100.00% ordinary income, including net short-term capital gains. Of the ordinary income, 73.89% was taxed as ordinary income, and 26.11% was taxed as qualified dividends.
The company also provided specific details regarding the classification of the 2025 dividends as follows: Form 1099-DIV Box 1a includes the combined amounts of the ordinary dividend per share and qualified dividends per share. The portion of the dividend reported in Box 1a treated as Qualified Dividend is reported on Form 1099-DIV in Box 1b. Net Capital Gain Dividend is reported on Form 1099-DIV in Box 2a. The company designated percentages of the total dividends by payment date as Interest-Related Dividend and Short-Term Capital Gain Dividend in accordance with Sections 871(k) and 881(e) under the Internal Revenue Code.
Non-U.S. residents and foreign corporation shareholders in a regulated investment company such as Capital Southwest are exempt from U.S. withholding tax on both "interest-related" dividends and short-term capital gains. Approximately 82.55% of Capital Southwest’s 2025 dividends relate to interest and short-term capital gains.
It is also noted that dividends distributed to Non-U.S. Shareholders may have been withheld to pay U.S. federal income tax and that they should contact their tax advisor with any questions regarding this information and its application to any claim for a refund of taxes paid to the U.S. Internal Revenue Service.
Capital Southwest Corporation is an internally managed business development company with approximately $1.9 billion in investments at fair value as of September 30, 2025. It focuses on supporting the acquisition and growth of middle market businesses with $5 million to $50 million investments across the capital structure. 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. Following these announcements, the company's shares moved -0.17%, and are now trading at a price of $23.68. If you want to know more, read the company's complete 8-K report here.
