Company: PDCC
Filing Date: 2025-07-18
Form Type: N-2
Source: 0001214659-25-010613
Chunk: 161

Company: Pearl Diver Credit Co Inc.
Filing Date: 2025-07-18
Form: N-2
Chunk 161
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 we have not yet received in cash, such as contractual payment-in-kind interest (which represents contractual
interest added to the loan balance and due at the end of the loan term) and deferred loan origination fees that are paid after origination
of the loan or are paid in non-cash compensation such as warrants or stock. Because any original issue discount or other amounts accrued
will be included in our investment company taxable income for the tax year of accrual, we may be required to make a distribution to our
stockholders in order to satisfy the Distribution Requirement or the Excise Tax Distribution Requirement, even though we will not have
received any corresponding cash amount.

We may invest (directly or indirectly through
an investment in an equity interest in a CLO treated as a partnership for U.S. federal income tax purposes) a portion of our net assets
in below-investment grade instruments. Investments in these types of instruments may present special tax issues for us. U.S. federal income
tax rules are not entirely clear about issues such as when we may cease to accrue interest, original issue discount or market discount,
when and to what extent deductions may be taken for bad debts or worthless instruments, how payments received on obligations in default
should be allocated between principal and income and whether exchanges of debt obligations in a bankruptcy or workout context are taxable.
These and other issues will be addressed by us to the extent necessary in order to seek to ensure that we distribute sufficient income
that we do not become subject to U.S. federal income or excise tax.

Some of the CLOs in which we invest may constitute
PFICs for U.S. federal income tax purposes. Because we acquire interests treated as equity for U.S. federal income tax purposes in PFICs
(including equity tranche investments and certain debt tranche investments in CLOs that are PFICs), we may be subject to federal income
tax on a portion of any “excess distribution” or gain from the disposition of such shares even if such income is distributed
as a taxable dividend by us to our stockholders. Additional charges in the nature of interest may be imposed on us in respect of deferred
taxes arising from any such excess distributions or gains. If we invest in a PFIC and elect to treat the PFIC as a QEF in lieu of the
foregoing requirements, we will be required to include in income each tax year our proportionate share of the ordinary earnings and net
capital gain of the QEF, even