Company: EOI
Filing Date: 2025-01-17
Form Type: N-2ASR
Source: 0001193125-25-008310
Chunk: 77

Company: Eaton Vance Enhanced Equity Income Fund
Filing Date: 2025-01-17
Form: N-2ASR
Chunk 77
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 offsetting option with respect to such stock or substantially identical stock or securities. In general, investment positions will be offsetting if there is a substantial diminution in the risk of loss from holding one position by reason of holding one or more other positions. The Fund expects that the call options it writes on portfolio securities will generally be ‘‘qualified covered calls’’ that are exempt from the straddle rules. To meet the qualified covered call option exemption, a stock-plus-call position cannot be part of a larger straddle and must meet a number of other conditions, including that the option is written more than 30 days prior to expiration and is not ‘‘deep-in-the-money’’as defined in the Code. The Fund may enter into certain investments that may constitute positions in a straddle. If two or more positions constitute a straddle, recognition of a realized loss from one position must be deferred to the extent of unrecognized gain in an offsetting position. In addition, long-term capital gain may be recharacterized as short-term capital gain, or short-term capital loss as long-term capital loss. Interest and other carrying charges allocable to personal property that is part of a straddle are not currently deductible but must instead be capitalized. Similarly, ‘‘wash sale’’ rules apply to prevent the recognition of loss by the Fund from the disposition of stock or securities at a loss in a case in which identical or substantially identical stock or securities (or an option to acquire such property) is or has been acquired within a prescribed period.

The Code allows a taxpayer to elect to offset gains and losses from positions that are part of a ‘‘mixed straddle.’’ Generally, a ‘‘mixed straddle’’ is a straddle in which one or more but not all positions are section 1256 contracts. The Fund may be eligible to elect to establish one or more mixed straddle accounts for certain of its mixed straddle trading positions. The mixed straddle account rules require a daily ‘‘marking to market’’ of all open positions in the account and a daily netting of gains and losses from positions in the account. At the end of a taxable year, the annual net gains or losses from the mixed straddle account are recognized for U.S. federal income tax purposes. The net capital gain or loss is treated as 60% long-term and 40% short-term capital gain or loss if it is attributable to the section 1256 contract positions, or all short-term capital gain or loss if it is attributable to the non