Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 160

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 160
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” mean
other ordinary losses and income that are not described in the preceding sentence.

Capital losses in excess of capital gains (“net
capital losses”) are not permitted to be deducted against a RIC’s net investment income. Instead, for U.S. federal income
tax purposes, potentially subject to certain limitations, we may carry a net capital loss from any taxable year forward indefinitely to
offset its capital gains, if any, in years following the year of the loss. To the extent subsequent capital gains are offset by such losses,
they will not result in U.S. federal income tax liability to us and may not be distributed as capital gains to shareholders. Generally,
we may not carry forward any losses other than net capital losses. The carryover of capital losses may be limited under the general loss
limitation rules if we experience an ownership change as defined in the Code.

For purposes of the Qualifying Income Test, income
that we earn from equity interests in certain entities that are not treated as corporations or as qualified publicly traded partnerships
for U.S. federal income tax purposes (e.g., certain CLOs that are treated as partnerships) will generally have the same character
for us as in the hands of such an entity; consequently, we may be required to limit our equity investments in any such entities that earn
fee income, rental income, or other nonqualifying income.

Some of the income and fees that we may recognize
will not satisfy the Qualifying Income Test. In order to ensure that such income and fees do not disqualify us as a RIC for a failure
to satisfy such test, we may be required to recognize such income and fees indirectly through one or more entities treated as corporations
for U.S. federal income tax purposes. Such corporations will be subject to pay U.S. corporate income tax on their earnings, which ultimately
will reduce our return on such income and fees.

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We may be required to recognize taxable income
in circumstances in which we do not receive cash. For example, if we hold debt instruments that are treated under applicable tax rules
as having original issue discount (which may arise if we receive warrants in connection with the origination of a loan or possibly in
other circumstances), we must include in income each tax year a portion of the original issue discount that accrues over the life of the
obligation, regardless of whether cash representing such income is received by us in the same tax year. We may also have to include in
income other amounts that