Tax Information

Allied Capital generates income from two primary sources: ordinary income from the interest and fees that we earn on our investments and net long-term capital gains that we realize throughout the year. As a regulated investment company, Allied Capital generally does not pay taxes on its earnings at the corporate level, but passes its income through to shareholders in the nature that it was earned. Therefore, a portion of our dividend is usually taxable to our shareholders at their ordinary income rates and a portion typically qualifies for the long-term capital gains rates. For 2008, we are currently estimating that 25% of the dividend will be generated from ordinary taxable income and 75% will be generated from taxable net long-term capital gains.

Please note that distributions that were reinvested through the company's Dividend Reinvestment Plan are treated, for tax purposes, as if they had been paid in cash. Therefore, stockholders who participated in the Dividend Reinvestment Plan should also refer to Tax Status letters for appropriate tax treatment of prior year dividends.

Please refer to the Tax Status letters for additional information regarding your prior year distributions, including the definitive tax treatment of your dividends.

If you have questions about the tax status of your distributions or to request an additional copy of your 1099, please contact American Stock Transfer and Trust Company at (800) 937-5449. You may also contact Allied Capital Corporation's Investor Relations Department directly at (888) 818-5298 or ir@alliedcapital.com.