Tax Information
For Shareholders on December 31, 2007
Capital Southwest Corporation met the applicable requirements of the Internal Revenue Code for Federal income tax treatment as a regulated investment company. Shareholders should consider the following when preparing 2007 tax returns.
Cash Dividends. The IRS Form 1099 reflects the $.20 per share dividend paid on May 31, 2007 and the $.40 per share dividend paid on November 30, 2007, both of which are qualified dividends and taxable at a maximum rate of 15% for individuals, estates or trusts.
Retained Long-Term Capital Gains. The Company did not retain any net long-term capital gains during the year. Therefore, shareholders will not follow the procedure used in other years for reporting undistributed capital gains and will neither receive a tax credit nor adjust the cost basis of their shares.
For Shareholders from 1968 through 2007
In certain years from 1968 through 2007, Capital Southwest made elections to retain taxable net long–term capital gains. The table below shows the record dates for all years for which Capital Southwest made such elections and the per share amounts of the retained long–term capital gains, the Federal income taxes paid and the amounts by which shareholders on each record date are entitled to increase the tax basis of each share (adjusted for stock splits in 1976, 1981 and 1987):
| Record Date | Retained capital gains per share | Federal income taxes paid per share | Increase in tax basis per share |
|---|---|---|---|
| Mar 31, 1968 | $0.5041 | $0.1292 | $0.3749 |
| Mar 31, 1969 | $0.3102 | $0.0852 | $0.2250 |
| Mar 31, 1970 | $0.2366 | $0.0662 | $0.1704 |
| Mar 31, 1983 | $1.2106 | $0.3390 | $0.8716 |
| Mar 31, 1984 | $0.1797 | $0.0503 | $0.1294 |
| Mar 31, 1985 | $0.3469 | $0.0971 | $0.2498 |
| Dec 31, 1986 | $3.2523 | $0.9106 | $2.3417 |
| Dec 31, 1989 | $3.2378 | $1.1008 | $2.1370 |
| Dec 31, 1991 | $5.9375 | $2.0187 | $3.9188 |
| Dec 31, 1992 | $2.0823 | $0.7080 | $1.3743 |
| Dec 31, 1996 | $4.7546 | $1.6641 | $3.0905 |
| Dec 31, 1997 | $4.9821 | $1.7437 | $3.2384 |
| Dec 31, 1998 | $0.2001 | $0.0700 | $0.1301 |
| Dec 31, 1999 | $3.0474 | $1.0666 | $1.9808 |
| Dec 31, 2005 | $3.5761 | $1.2516 | $2.3245 |
| Dec 31, 2006 | $8.1469 | $2.8514 | $5.2955 |
Shareholders who owned shares on each of the above record dates should increase the tax basis of such shares by an aggregate of $27.8527 per share.
