§ 4982. Excise tax on undistributed income of regulated investment companies
(a)
Imposition of tax
There is hereby imposed a tax on every regulated investment company for each calendar year equal to 4 percent of the excess (if any) of—
(b)
Required distribution
For purposes of this section—
(1)
In general
The term “required distribution” means, with respect to any calendar year, the sum of—
(2)
Increase by prior year shortfall
The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of—
(c)
Distributed amount
For purposes of this section—
(1)
In general
The term “distributed amount” means, with respect to any calendar year, the sum of—
(B)
any amount on which tax is imposed under subsection (b)(1) or (b)(3)(A) of section
852 for any taxable year ending in such calendar year.
(2)
Increase by prior year overdistribution
The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of—
(3)
Determination of dividends paid
The amount of the dividends paid during any calendar year shall be determined without regard to—
(4)
Special rule for estimated tax payments
(A)
In general
In the case of a regulated investment company which elects the application of this paragraph for any calendar year—
(d)
Time for payment of tax
The tax imposed by this section for any calendar year shall be paid on or before March 15 of the following calendar year.
(e)
Definitions and special rules
For purposes of this section—
(1)
Ordinary income
(2)
Capital gain net income
(B)
Reduction by net ordinary loss for calendar year
The amount determined under subparagraph (A) shall be reduced (but not below the net capital gain) by the amount of the company’s net ordinary loss for the calendar year.
(4)
Election to use taxable year in certain cases
(A)
In general
If—
(i)
the taxable year of the regulated investment company ends with the month of November or December, and
subsection (b)(1)(B) and paragraph (2) of this subsection shall be applied by taking into account the company’s taxable year in lieu of the 1-year period ending on October 31 of the calendar year.
(5)
Treatment of specified gains and losses after October 31 of calendar year
(A)
In general
Any specified gain or specified loss which (but for this paragraph) would be properly taken into account for the portion of the calendar year after October 31 shall be treated as arising on January 1 of the following calendar year.
(B)
Specified gains and losses
For purposes of this paragraph—
(i)
Specified gain
The term “specified gain” means ordinary gain from the sale, exchange, or other disposition of property (including the termination of a position with respect to such property). Such term shall include any foreign currency gain attributable to a section
988 transaction (within the meaning of section
988) and any amount includible in gross income under section
1296
(a)(1).
(ii)
Specified loss
The term “specified loss” means ordinary loss from the sale, exchange, or other disposition of property (including the termination of a position with respect to such property). Such term shall include any foreign currency loss attributable to a section
988 transaction (within the meaning of section
988) and any amount allowable as a deduction under section
1296
(a)(2).
(6)
Treatment of mark to market gain
(A)
In general
For purposes of determining a regulated investment company’s ordinary income, notwithstanding paragraph (1)(C), each specified mark to market provision shall be applied as if such company’s taxable year ended on October 31. In the case of a company making an election under paragraph (4), the preceding sentence shall be applied by substituting the last day of the company’s taxable year for October 31.
(7)
Elective deferral of certain ordinary losses
Except as provided in regulations prescribed by the Secretary, in the case of a regulated investment company which has a taxable year other than the calendar year—
(A)
such company may elect to determine its ordinary income for the calendar year without regard to any net ordinary loss (determined without regard to specified gains and losses taken into account under paragraph (5)) which is attributable to the portion of such calendar year which is after the beginning of the taxable year which begins in such calendar year, and
(f)
Exception for certain regulated investment companies
This section shall not apply to any regulated investment company for any calendar year if at all times during such calendar year each shareholder in such company was—
(2)
a segregated asset account of a life insurance company held in connection with variable contracts (as defined in section
817
(d)) [1]
(3)
any other tax-exempt entity whose ownership of beneficial interests in the company would not preclude the application of section
817
(h)(4), or
For purposes of the preceding sentence, any shares attributable to an investment in the regulated investment company (not exceeding $250,000) made in connection with the organization of such company shall not be taken into account.
[1] So in original. Probably should be followed by a comma.