Form 2438

(Rev. March 2018)

Department of the Treasury 

Internal Revenue Service 

Undistributed Capital Gains Tax Return 

▶ Attach a copy of this form to Form 1120-RIC or to Form 1120-REIT.

▶ Go to www.irs.gov/Form2438 for instructions and the latest information.

OMB No. 1545-0123

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

Please 

Type 

or 

Print 

Name of fund or REIT Employer identification number

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

City or town, state, and ZIP code

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

(a) Description of property 

(Example, 100 shares of Z Co.) 

(b) Date acquired 

(mo., day, yr.) 

(c) Date sold 

(mo., day, yr.) 

(d) Sales price 

(see instructions) 

(e) Cost or 

other basis 

(see instructions) 

(f) Gain or (loss) 

((d) less (e)) 

1 

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

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

4 Net short-term capital gain or (loss). Combine lines 1 through 3. See instructions . . . . . . 4 

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

5 

6 Gain from Form 4797, column (g), line 7 or 9 . . . . . . . . . . . . . . . . . . 6 

7 Long-term capital gain from installment sales from Form 6252, line 26 or 37 . . . . . . . . 7 

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

Part III Summary of Parts I and II 

9 a 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 

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

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

857(b)(3)(D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 

12 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 

13 Qualified timber gain included in the amount on line 11 . . . . . . . . . . . . . . . 13

14 Subtract line 13 from line 11 . . . . . . . . . . . . . . . . . . . . . . . 14

15 Multiply line 13 by the applicable rate. See instructions . . . . . . . . . . . . . . . 15

16 Multiply line 14 by the applicable rate. See instructions . . . . . . . . . . . . . . . 16

17 Capital gains tax. Add lines 15 and 16 . . . . . . . . . . . . . . . . . . . . 17

Sign 

Here

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.

▲

Signature of officer Date ▲

Title

Paid 

Preparer 

Use Only

Print/Type preparer’s name Preparer’s signature Date Check if 

self-employed

PTIN

Firm’s name ▶

Firm’s address ▶

Firm’s EIN ▶

Phone no.

For Paperwork Reduction Act Notice, see instructions. Cat. No. 11856I Form 2438 (Rev. 3-2018) 
Form 2438 (Rev. 3-2018) Page 2 

General Instructions 

Section references are to the 

Internal Revenue Code. 

Future Developments

For the latest information about 

developments related to Form 2438 

and its instructions, such as 

legislation enacted after they were 

published, go to 

www.irs.gov/Form2438.

What’s New

Capital gains tax rate for fiscal 

year filers. P.L. 115-97 replaced the 

graduated corporate tax rate 

structure with a flat 21% rate 

effective for tax years beginning after 

December 31, 2017. However, under 

section 15, RICs or REITs with fiscal 

tax years beginning before January 

1, 2018, and ending after December 

31, 2017, figure and apportion the 

capital gains tax by blending the 

rates in effect before January 1, 

2018, with the 21% rate in effect 

after December 31, 2017. See the 

instructions for lines 15 and 16.

Alternative tax on qualified timber 

gains. The alternative tax on 

qualified timber gains has been 

extended for tax years beginning in 

2017. This alternative tax may apply 

if a RIC or REIT has both a net 

capital gain and qualified timber 

gain. We added lines 13 through 17 

in Part III to compute the capital 

gains tax including the reduced tax 

rate for qualified timber gains.

Who Must File 

Regulated investment companies 

(RICs) and real estate investment 

trusts (REITs) file Form 2438 if the 

RIC 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. 

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). 

See the instructions for Schedule 

D (Form 1120) and Form 8949 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. 

Where To File 

File the original form with the: 

Internal Revenue Service Center 

201 W. Rivercenter Blvd. 

Covington, KY 41011 

In addition, attach a copy of Form 

2438 to Form 1120-RIC or Form 

1120-REIT. 

Who Must Sign 

Form 2438 must be signed and 

dated by: 

• The president, vice president, 

treasurer, assistant treasurer, chief 

accounting officer, or 

• Any other corporate officer (such 

as tax officer) authorized to sign. 

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.

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 space 

should remain blank. Anyone who 

prepares Form 2438 but doesn’t 

charge the RIC or REIT shouldn’t 

sign the return. Generally, anyone 

who is paid to prepare Form 2438 

must sign it and fill in the Paid 

Preparer Use Only area. 

Paid preparer. The paid preparer

must complete the Paid Preparer 

Use Only area (including signing the 

form in the space provided for the 

preparer’s signature) and give a 

copy of Form 2438 to the taxpayer.

Penalty for Late Filing of 

Return 

A RIC or REIT that doesn’t file its tax 

return by the due date, including 

extensions, may be penalized 5% of 

the unpaid tax for each month or 

part of the 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 

$210. For tax years beginning in 

2017, the penalty won’t be imposed 

if the RIC or REIT can show that the 

failure to file on time was due to 

reasonable cause.

Note. The minimum penalty amount 

may be adjusted for inflation. See 

the instructions for your applicable 

income tax return for the minimum 

penalty amount for the current tax 

year. 

Penalty for Late Payment of 

Tax 

A RIC or REIT that doesn’t pay the 

tax when due generally may be 

penalized 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 won’t be imposed if the RIC 

or REIT can show that the failure to 

pay on time was due to reasonable 

cause.

Reasonable cause determinations.

If the RIC or REIT receives a notice 

about penalties after it files its return, 

send the IRS an explanation and we 

will determine if the RIC or REIT 

meets the reasonable cause criteria. 

Do not attach an explanation when 

the RIC’s or REIT’s return is filed.

Electronic Deposit 

Requirement

RICs and REITs must use electronic 

funds transfers to make all federal 

tax deposits (such as deposits of 

employment tax, excise tax, and 

corporate income tax). Generally, 

electronic fund transfers are made 

using the Electronic Federal Tax 

Payment System (EFTPS). However, 

if you don’t want to use EFTPS, you 

can arrange for your tax 

professional, financial institution, 

payroll service, or other trusted third 

party to make deposits on your 

behalf. Also, you may arrange for 

your financial institution to submit a 

same-day tax wire payment 
Form 2438 (Rev. 3-2018) Page 3 

(discussed below) on your behalf. 

EFTPS is a free service provided by 

the Department of Treasury. 

Services provided by your tax 

professional, financial institution, 

payroll service, or other third party 

may have a fee. 

For more information about 

EFTPS, or to enroll in EFTPS, visit 

the EFTPS website at 

www.eftps.gov or call 

1-800-555-4477 (TTY/TDD 

1-800-733-4829). 

Depositing on time. For any deposit 

made by EFTPS to be on time, the 

RIC or REIT must submit the deposit 

by 8 p.m. Eastern time on the day 

before the date the deposit is due. If 

the RIC or REIT uses a third party to 

make the deposits on its behalf, they 

may have different cutoff times.

Same-day wire payment option. If 

the RIC or REIT fails to submit a 

deposit transaction on EFTPS by 

8 p.m. Eastern time the day before 

the date a deposit is due, it can still 

make the deposit on time by using 

the Federal Tax Collection Service 

(FTCS). To use the same-day wire 

payment method, the RIC or REIT 

will need to make arrangements with 

its financial institution ahead of time 

regarding availability, deadlines, and 

costs. Financial institutions may 

charge a fee for payments made this 

way. To learn more about the 

information the RIC or REIT will need 

to provide to its financial institution 

to make a same-day wire payment, 

visit the IRS website at www.irs.gov/

Payments and click on “Same-day 

wire.”

Specific Instructions 

Period covered. Fill in the tax year 

space at the top of the form. 

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. 

Lines 1 and 5 

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. 

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. 

Line 4 

Enter any net short-term capital gain 

from line 4 in Part I of Form 8949. 

Also identify the gain as “Net shortterm capital gain from line 4, Form 

2438” in column (a) of Form 8949. 

See Form 8949, Schedule D (Form 

1120), and the related instructions 

for details.

Line 12

Enter the amount from line 12 in 

Part II of Form 8949. Also identify 

the gain as “Undistributed capital 

gains not designated (from Form 

2438)” in column (a) of Form 8949. 

See Form 8949, Schedule D (Form 

1120), and the related instructions 

for details. 

Line 13

For a definition of qualified timber 

gain, see section 1201(b)(2).

Line 15

A RIC or REIT with a tax year ending 

before 2018 will multiply the amount 

on line 13 by 23.8% (0.238) and 

enter this amount on line 15. RICs or 

REITs with fiscal tax years ending 

after 2017 will use the following 

worksheet to figure the amount to 

enter on line 15.

1. Enter the amount from Form 

2438, line 13 . . . . . .

2. Multiply line 1 by 23.8% (0.238)

3. Multiply line 1 by 21% (0.21) .

4. Multiply line 2 by the number of 

days in the RIC’s or REIT’s tax 

year before January 1, 2018 .

5. Multiply line 3 by the number of 

days in the RIC’s or REIT’s tax 

year after December 31, 2017 .

6. Divide line 4 by the total number 

of days in the RIC’s or REIT’s tax 

year . . . . . . . .

7. Divide line 5 by the total number 

of days in the RIC’s or REIT’s tax 

year . . . . . . . .

8. Add lines 6 and 7. Enter this 

amount on Form 2438, line 15 .

Line 16

A RIC or REIT with a tax year ending 

before 2018 will multiply the amount 

on line 14 by 35% (0.35) and enter 

this amount on line 16. RICs or 

REITs with fiscal tax years ending 

after 2017 will use the following 

worksheet to figure the amount to 

enter on line 16.

1. Enter the amount from Form 

2438, line 14 . . . . . .

2. Multiply line 1 by 35% (0.35) .

3. Multiply line 1 by 21% (0.21) .

4. Multiply line 2 by the number of 

days in the RIC’s or REIT’s tax 

year before January 1, 2018 .

5. Multiply line 3 by the number of 

days in the RIC’s or REIT’s tax 

year after December 31, 2017 .

6. Divide line 4 by the total number 

of days in the RIC’s or REIT’s tax 

year . . . . . . . .

7. Divide line 5 by the total number 

of days in the RIC’s or REIT’s tax 

year . . . . . . . .

8. Add lines 6 and 7. Enter this 

amount on Form 2438, line 16 .
Form 2438 (Rev. 3-2018) Page 4 

Line 17

Deposit the tax due by the 30th day 

after the end of the tax year.

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 with these 

laws and to allow us to figure and 

collect the right amount of tax. 

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. 

The time needed to complete and 

file this form will vary depending on 

individual circumstances. The 

estimated burden for business 

taxpayers filing this form is approved 

under OMB control number 

1545-0123 and is included in the 

estimates shown in the instructions 

for their business income tax return.

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 send us 

comments from 

www.irs.gov/FormComments. Or 

you can write to the Internal 

Revenue Service, Tax Forms and 

Publications Division, 1111 

Constitution Ave. NW, IR-6526, 

Washington, DC 20224.

Do not send the tax form to this 

office. Instead, see Where To File, 

earlier.