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 2001 or tax year beginning , 2001, 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 Paperwork Reduction Act Notice, see instructions on page 3. Cat. No. 11856I Form 2438 (2001)

(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

2001

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. ( )

 




Form 2438 (2001) Page 2

General Instructions

Section references are to the

Internal Revenue Code.

Who Must Sign

Form 2438 must be signed and

dated by one of the following

individuals:

Note: If this return 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 fund 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, by hand, in the

space provided for the preparer’s

signature (signature stamps and

labels are not acceptable).

Purpose of Form

Form 2438 is used by funds 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 fund’s or the REIT’s

tax year.

A fund 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 fund or REIT can

show that the failure to pay on time

was due to reasonable cause.

● Furnish 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 form with the same Internal

Revenue Service Center where Form

1120-RIC or Form 1120-REIT will be

filed. Attach a copy of Form 2438 to

Form 1120-RIC or Form 1120-REIT.

Penalty for Late Filing of Return

A fund 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

fund or REIT can show that the

failure to file on time was due to

reasonable cause. Funds 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

fund (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 fund 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 2002 if:

● The total deposits of such taxes in

2000 were more than $200,000 or

● The fund or REIT was required to

use EFTPS in 2001.

If the fund or REIT is required to

use EFTPS and fails to do so, it may

be subject to a 10% penalty. If the

fund 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.

Deposits With Form 8109

Do not send deposits directly to

an IRS office; otherwise, the fund or

REIT may have to pay a penalty.

Mail or deliver the completed Form

8109 with the payment to an

authorized depositary, i.e., 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, write the

fund’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 on the

coupon. Records of these deposits

will be sent to the IRS.

For more information on deposits,

see the instructions in the coupon

booklet (Form 8109) and Pub 583,

Starting a Business and Keeping

Records.

● Any other corporate officer (such

as tax officer) authorized to sign.

Receivers, trustees, or assignees

must also sign and date any return

filed on behalf of a fund or REIT.

If the fund or REIT does not use

EFTPS, deposit tax payments (and

estimated tax payments) with Form

8109, Federal Tax Deposit Coupon

Book. If you do not have a

preprinted Form 8109, use Form

8109-B to make deposits. You can

get this form only by calling

1-800-829-1040. 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

fund or REIT must initiate the

transaction at least 1 business day

before the date the deposit is due.

Caution: If the fund 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,

if applicable.
Form 2438 (2001) Page 3

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.

Period covered. File the 2001 return

for calendar year 2001 and fiscal

years that begin in 2001 and end in

2002. 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 35 min.

Preparing and sending

the form to the IRS 45 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 Tax Forms Committee,

Western Area Distribution Center,

Rancho Cordova, CA 95743-0001.

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 fund 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

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.

Election To Recognize Gain

on Assets Held on January

1, 2001

RICs and REITs may elect to treat

certain assets held on January 1,

2001, as having been sold and then

reacquired on the same date. The

purpose of the election is to make

future gain on the asset eligible for

an 18% (instead of 20%) capital

gain tax rate at the shareholder level

to the extent the gain is designated

under section 852(b)(3) or 857(b)(3)

by the RIC or REIT as a capital gain

distribution or undistributed capital

gain. The 18% rate is applicable to

the extent the gain would otherwise

be taxed to the shareholder at 20%

if the holding period of the asset

begins after December 31, 2000,

and the asset is held for more than

five years.

Any readily tradable stock (that is

a capital asset) not sold before

January 2, 2001, for which the

election is made is deemed to have

been sold on January 2, 2001, at its

closing market price on that date

and reacquired on that date for the

same amount. For this purpose,

readily tradable stock includes

shares issued by an open-end

mutual fund. Any other capital asset

held on January 1, 2001, for which

the election is made is deemed to

have been sold and reacquired on

January 1, 2001, for its fair market

value on that date. Any gain on a

deemed sale must be recognized

without regard to any provision of

the Internal Revenue Code. A loss

from a deemed sale is not allowed in

any tax year, but the asset will be

eligible for the 18% rate on future

gain. The basis in the reacquired

asset is its closing market price or

fair market value, whichever applies,

on the date of the deemed sale,

whether the deemed sale results in

a gain or an unallowed loss.

If the RIC or REIT makes the

election with respect to an interest

in another pass-through entity and

that pass-through entity makes the

election with respect to assets it

holds, that pass-through entity’s

election will be considered to

immediately precede the RIC’s or

REIT’s election for deemed sales

that occur on the same day.

Pass-through entities include mutual

funds (or other regulated investment

companies), real estate investment

trusts, S corporations, partnerships,

estates, trusts, and common trust

funds.

To make the election, report the

deemed sale(s) on Form 2438 for

the tax year that includes the date

of the deemed sale.

If the deemed sale results in a

loss, enter zero instead of the

amount of the loss. Make the

election on a share-by-share or

asset-by-asset basis. Attach a

statement to Form 2438 stating that

the RIC or REIT is making an

election under section 311 of the

Taxpayer Relief Act of 1997 and

listing the asset(s) for which the

election is being made. File Form

2438 no later than its due date

(including extensions). However, if

Form 2438 was filed on time without

making the election for one or more

eligible assets, the election can still

be made for those assets on an

amended Form 2438 filed within 6

months of the original Form 2438

due date (excluding extensions).

Write “Election Under Section 311 of

the Taxpayer Relief Act of 1997” at

the top of the amended Form 2438.

Once made, an election for any

asset is irrevocable.

Note: The RIC or REIT may not

make this election for any asset that

the RIC or REIT disposed of (in a

transaction in which gain or loss is

recognized in whole or in part)

before the close of the 1-year period

beginning on the date that the asset

would have been treated as sold

under this election.

premiums before entering an amount

in column (e).