Tax Information

Tax Information

The information on dividends paid by Prospect Capital Corporation ("Prospect") are set forth below. For tax purposes, Prospect is a regulated investment company ("RIC") and is designating the types of distributions you have received as a stockholder in in accordance with Subchapter M of the Internal Revenue Code of 1986, as amended ("IRC"), in the following manner:

Non-Qualified Dividends

These dividends are from Prospect's ordinary net investment income and net short-term capital gains for the year. This type of dividend is to be reported on your tax return as ordinary income. Ordinary dividend distributions from a RIC do not qualify for the preferential tax rate on dividend income from domestic corporations and qualified foreign corporations except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations (see Qualified Dividends below). This type of income is reported in Box 1a of Form 1099.

Qualified Dividends

These dividends are from Prospect's receipt of dividend income from ownership of stock of certain domestic and qualified foreign corporations. This type of dividend is to be reported on your tax return as "qualified" dividend income eligible for preferential tax rates. Qualified dividends are reported in Box 1b of Form 1099.

Capital Gain Dividends

Capital gain dividends arise from net long-term capital gain recognized by Prospect during the respective year. These capital gain distributions generally qualify for the maximum 20% U.S. federal income tax rate on net capital gain recognized by U.S. resident individuals and certain other U.S. persons. Total capital gain distributions are reported in Box 2a of Form 1099.


From 2004 to the first quarter of 2010, we paid our dividends quarterly in arrears. Starting at the end of the second quarter of 2010, we switched to monthly payments. Dividends are paid out of the assets legally available for distribution. Our dividends, if any, will be determined by our board of directors.

The following is a table representing dividends and distributions paid by Prospect:

Year Amount Per Share Taxable Percentage Qualified Dividend Percentage1 Non-Qualified Dividend Percentage2 Return of Capital Percentage Long-Term Capital Gain3 Interest Related or Short-Term Capital Gains Dividends under Sec. 871(k) 4
2004 $0.10 100.00% 100.00% 0.00% 0.00%
2005 $0.76 100.00% 33.33% 66.67% 0.00%
2006 $1.41 100.00% 18.80% 81.20% 0.00%
2007 $1.57 100.00% 15.51% 84.49% 0.00%
2008 $1.61 100.00% 15.67% 84.33% 0.00%
2009 $1.63 72.56% 28.13% 71.87% 27.44%
2010 $1.11 71.38% 9.32% 90.68% 28.62%
2011 $1.22 86.93% 13.08% 86.92% 13.07%
2012 $1.23 100.00% 56.61% 43.39% 0.00%
2013 $1.32 100.00% 4.28% 95.72% 0.00%
2014 $1.33 100.00% 0.60% 99.40% 0.00%
2015 $1.03 100.00% 0.52% 99.48% 0.00% 0.00% 46.23%
2016 $1.00 100.00% 0.11% 99.89% 0.00% 0.00% 48.18%

This information supersedes any estimated information you may have received during the year.




1Prospect hereby designates this portion of its distributions as amounts eligible for treatment as qualified dividend income in accordance with IRC Section 854(b) as well as eligible for the dividends received deduction available to certain U.S. domestic corporations.
2Non-qualified dividends are generally taxed as ordinary income.
3Prospect hereby designates this portion of its distributions as amounts eligible for treatment as capital gain dividends in accordance with IRC Sections 852(b)(3) and 854(a).
4Prospect hereby designates this portion of its distribution as interest related dividends in accordance with IRC Section 871(k). Section 871(k) provides that certain interest related dividends and short term capital gain dividends paid by RICs to foreign shareholders are exempt from U.S. withholding tax.

Distributions that were reinvested through the Prospect's dividend reinvestment plan are treated as if they had been paid in cash for U.S. tax purposes. Therefore, anyone who participated in the dividend reinvestment plan should also refer to the table above for the appropriate tax treatment of any dividends received.

Shareholders should consult their tax advisor for tax guidance pertinent to their own specific facts and circumstances.