Undistributed Capital Gains Tax Return OMB No. 1545-0144

Form 2438

Department of the Treasury

Internal Revenue Service  Attach a copy of this form to Form 1120-RIC or to Form 1120-REIT.

For calendar year 2004 or tax year beginning , 2004, ending , 20

Name of fund or REIT Employer identification number

Please

Type

or

Print

Number, street, and room or suite no. (If a P.O. box, see instructions.)

City or town, state, and ZIP code

Short-Term Capital Gains and Losses—Assets Held One Year or Less

(f) Gain or (loss)

((d) less (e))

(e) Cost or other

basis (see

instructions)

(c) Date sold

(mo., day, yr.)

(b) Date acquired

(mo., day, yr.)

(a) Description of property (Example, 100 shares

of Z Co.)

1

2 Short-term capital gain from installment sales from Form 6252, line 26 or 37 2

3 ( ) 3 Unused capital loss carryover (attach computation)

Net short-term capital gain or (loss). Combine lines 1 through 3. (See instructions.)

5

Long-Term Capital Gains and Losses—Assets Held More Than One Year

6

7

Gain from Form 4797, column (g), line 7 or 9

7

8

Long-term capital gain from installment sales from Form 6252, line 26 or 37

8 Net long-term capital gain. Combine lines 5 through 7

11

9a

Net capital gain. Enter excess of net long-term capital gain (line 8) over net short-term capital loss

(line 4)

9a

b Capital gain dividends 9b

Undistributed capital gains. Subtract line 9b from line 9a 10

12

11

Amount of undistributed capital gains on line 10 designated under section 852(b)(3)(D) or

857(b)(3)(D)

13 Capital gains tax. Multiply line 11 by 35% (.35). (See instructions.) 13

Part II

Part I

For Privacy Act and Paperwork Reduction Act Notice, see instructions on page 3. Cat. No. 11856I Form 2438 (2004)

(d) Sales price

(see instructions)

Amount of undistributed capital gains not designated under section

852(b)(3)(D) or 857(b)(3)(D). Subtract line 11 from line 10. (See

instructions.) 12

4 4

10

6

Part III Summary of Parts I and II

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,

correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge. Sign

Here

Signature of officer Date Title

Date Preparer’s SSN or PTIN Preparer’s

signature

Check if

self-employed

Paid

Preparer’s

Use Only

Firm’s name (or

yours if self-employed),

address, and ZIP code

EIN

Phone no. ( )

 





2004
Form 2438 (2004) Page 2

General Instructions

Section references are to the Internal

Revenue Code.

Who Must Sign

Form 2438 must be signed and

dated by:

For a return that is being filed for

a series fund (discussed in section

851(g)), the return may be signed by

any officer authorized to sign for the

RIC in which the fund is a series.

If a corporate officer completes

Form 2438, the Paid Preparer’s

space should remain blank. Anyone

who prepares Form 2438 but does

not charge the RIC or REIT should

not sign the return. Generally,

anyone who is paid to prepare Form

2438 must sign it and fill in the Paid

Preparer’s Use Only area.

Penalty for Late Payment of Tax

● Sign the return in the space

provided for the preparer’s

signature.

Purpose of Form

Form 2438 is used by RICs or REITs

to figure income tax on undistributed

capital gains designated under

section 852(b)(3)(D) or section

857(b)(3)(D).

Depository Method of Tax

Payment

See the instructions for Schedule

D (Form 1120) for a definition of

capital assets and information on

figuring and reporting capital gains

and losses.

When To File

File Form 2438 by the 30th day after

the end of the RIC’s or the REIT’s

tax year.

A RIC or REIT that does not pay the

tax when due generally may have to

pay a penalty of 1⁄2 of 1% of the

unpaid tax for each month or part of

a month the tax is not paid, up to a

maximum of 25% of the unpaid tax.

The penalty will not be imposed if

the RIC or REIT can show that the

failure to pay on time was due to

reasonable cause.

● Give a copy of Form 2438 to the

taxpayer.

Paid preparer. The paid preparer

must complete the required preparer

information and:

The two methods of depositing

corporate income taxes, including

the capital gains tax, are discussed

below.

● The president, vice president,

treasurer, assistant treasurer, chief

accounting officer or

File the original form with the:

Penalty for Late Filing of Return

A RIC or REIT that does not file its

tax return by the due date, including

extensions, may have to pay a

penalty of 5% of the unpaid tax for

each month or part of a month the

return is late, up to a maximum of

25% of the unpaid tax. The

minimum penalty for a return that is

more than 60 days late is the

smaller of the tax due or $100. The

penalty will not be imposed if the

RIC or REIT can show that the

failure to file on time was due to

reasonable cause. RICs or REITs

that file late must attach a statement

explaining the reasonable cause.

Who Must File

Regulated investment companies

(RICs) and real estate investment

trusts (REITs) file Form 2438 if the

RIC (defined below) or REIT is

electing to designate undistributed

capital gains under section

852(b)(3)(D) or 857(b)(3)(D).

If a RIC has more than one fund,

each fund must file a separate Form

2438. The term “fund” as used in

these instructions refers to the

definition in section 851(g) and to

any RIC that does not have more

than one portfolio of assets.

Where To File

Electronic Deposit Requirement

The RIC or REIT must make

electronic deposits of all depository

taxes (such as employment tax,

excise tax, and corporate income

tax) using the Electronic Federal Tax

Payment System (EFTPS) in 2005 if:

● The total deposits of such taxes in

2003 were more than $200,000 or

● The RIC or REIT was required to

use EFTPS in 2004.

If the RIC or REIT is required to

use EFTPS and fails to do so, it may

be subject to a 10% penalty. If the

RIC or REIT is not required to use

EFTPS, it may participate voluntarily.

To enroll in or get more information

about EFTPS, call 1-800-555-4477

or 1-800-945-8400. To enroll online,

visit www.eftps.gov.

Deposits With Form 8109

● Any other corporate officer (such

as tax officer) authorized to sign.

If the RIC or REIT does not use

EFTPS, deposit tax payments (and

estimated tax payments) with Form

8109, Federal Tax Deposit Coupon.

If you do not have a preprinted Form

8109, use Form 8109-B to make

deposits. You can get this form only

by calling 1-800-829-4933. Be sure

to have your employer identification

number (EIN) ready when you call.

Depositing on time. For deposits

made by EFTPS to be on time, the

RIC or REIT must initiate the

transaction at least 1 business day

before the date the deposit is due.

Do not send deposits directly to

an IRS office; otherwise, the RIC or

REIT may have to pay a penalty.

Mail or deliver the completed Form

8109 with the payment to an

authorized depositary, (that is, a

commercial bank or other financial

institution authorized to accept

federal tax deposits). Make checks

or money orders payable to the

depositary.

To help ensure proper crediting,

enter the RIC’s or REIT’s EIN, the

tax period to which the deposit

applies, and “Form 1120-RIC” or

“Form 1120-REIT,” whichever

applies, on the check or money

order. Be sure to darken the “1120”

box under “Type of Tax” and the

appropriate “Quarter” box under

“Tax Period” on the coupon.

Records of these deposits will be

sent to the IRS. For more

If a return is filed on behalf of a

RIC or REIT by a receiver, trustee or

assignee, the fiduciary must sign the

return, instead of the corporate

officer. Returns and forms signed by

a receiver or trustee in bankruptcy

on behalf of a RIC or REIT must be

accompanied by a copy of the order

or instructions of the court

authorizing signing of the return or

form.

In addition, attach a copy of Form

2438 to Form 1120-RIC or Form

1120-REIT.

Internal Revenue Service Center

201 W. Rivercenter Blvd.

Covington, KY 41011
Form 2438 (2004) Page 3

with these laws and to allow us to

figure and collect the right amount

of tax. Section 6109 requires return

preparers to provide their identifying

numbers on the return.

Period covered. File the 2004 return

for calendar year 2004 and fiscal

years that begin in 2004. For a fiscal

year, fill in the tax year space at the

top of the form.

The time needed to complete and

file this form will vary depending on

individual circumstances. The

estimated average time is:

Recordkeeping 7 hr., 39 min.

Learning about the

law or the form 24 min.

Preparing and sending

the form to the IRS 32 min.

If you have comments concerning

the accuracy of these time estimates

or suggestions for making this form

simpler, we would be happy to hear

from you. You can write to the

Internal Revenue Service; Tax

Products Coordinating Committee;

SE:W:CAR:MP:T:T:SP; 1111

Constitution Ave., NW, IR-6406;

Washington, DC 20224. Do not send

the tax form to this office. Instead,

see Where To File on

page 2.

Specific Instructions

Address. Include the suite, room, or

other unit number after the street

address. If the Post Office does not

deliver mail to the street address

and the RIC or REIT has a P.O. box,

show the box number instead of the

street address.

Line 4

Enter any net short-term capital gain

from line 4 on line 1 of Schedule D

(Form 1120) as “Net short-term

capital gain from line 4, Form 2438.”

Line 13

Enter the amount from line 12 on

line 6 of Schedule D (Form 1120) as

“Undistributed capital gains not

designated (from Form 2438).”

Line 12

Lines 1 and 5

Column (d). Enter either gross sales

price or net sales price. If net sales

price is entered, do not increase the

cost or other basis in column (e) by

any expenses reflected in the net

sales price.

Column (e). If gross sales price

is reported in column (d), increase

the cost or other basis by any

expense of sale such as broker’s

fees, commissions, or option

premiums before entering an amount

in column (e).

A RIC’s or REIT’s basis in an

asset it held on January 1, 2001, for

which the RIC or REIT made an

election to recognize any gain (under

section 311 of the Taxpayer Relief

Act of 1997) is the asset’s closing

market price or fair market value,

whichever applies, on the date of

the deemed sale and reacquisition,

whether the deemed sale resulted in

a gain or unallowed loss.

Deposit the tax due by the 30th day

after the end of the tax year.

You are not required to provide

the information requested on a form

that is subject to the Paperwork

Reduction Act unless the form

displays a valid OMB control

number. Books or records relating to

a form or its instructions must be

retained as long as their contents

may become material in the

administration of any Internal

Revenue law. Generally, tax returns

and return information are

confidential, as required by section

6103.

Column (b)—Date acquired. A

RIC’s or REIT’s acquisition date for

an asset it held on January 1, 2001,

for which it made an election to

recognize any gain (under section

311 of the Taxpayer Relief Act of

1997) is the date of the deemed sale

and reacquisition.

If the RIC or REIT owes tax when

it files Form 2438, do not include the

payment with the tax return. Instead,

mail or deliver the payment with

Form 8109 to an authorized

depositary, or use EFTPS.

For more information on deposits,

see the instructions in the coupon

booklet (Form 8109) and Pub. 583,

Starting a Business and Keeping

Records.

information, see “Marking the Proper

Tax Period” in the instructions for

Form 8109.

Privacy Act and Paperwork

Reduction Act Notice. We ask for

the information on this form to carry

out the Internal Revenue laws of the

United States. You are required to

give us the information. We need it

to ensure that you are complying