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 1999 or tax year beginning , 1999, ending , 

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

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 selfemployed 

Paid

Preparer’s

Use Only

Firm’s name (or

yours if self-employed)

and address

EIN 

ZIP code 

For Paperwork Reduction Act Notice, see instructions on back. Cat. No. 11856I Form 2438 (1999)







(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

1999
Form 2438 (1999) Page 2

General Instructions

Section references are to the Internal

Revenue Code.

Who Must Sign

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.

Form 2438 must be signed and dated by one

of the following individuals:

Period covered. File the 1999 return for

calendar year 1999 and fiscal years that

begin in 1999 and end in 2000. 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:

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.

Recordkeeping 7 hr., 39 min.

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.

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

above.

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 RICs and REITs to

figure income tax on undistributed capital

gains designated under section 852(b)(3)(D) or

section 857(b)(3)(D).

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.

Depository Method of Tax

Payment Line 4

Deposits with Form 8109. If the fund or REIT

does not use EFTPS, deposit income tax

payments with Form 8109. See the

instructions for Form 1120-RIC or 1120-REIT

for information on making deposits with Form

8109.

See the instructions for Schedule D (Form

1120) for a definition of capital assets and

information on figuring and reporting capital

gains and losses. 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.”

When To File

File Form 2438 by the 30th day after the end

of the fund’s or the REIT’s tax year.

Line 13

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:

Enter the amount from line 12 on line 6 of

Schedule D (Form 1120). Report this amount

as “Undistributed capital gains not

designated (from Form 2438).”

Line 12

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 a qualified

depositary or FRB, or use EFTPS, if

applicable.

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).

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.

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

● 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.

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 the fund’s Form 1120-RIC or

the REIT’s Form 1120-REIT.

A penalty may be imposed if the deposits

are mailed or delivered to an IRS office rather

than to an authorized depositary or FRB. For

more information on deposits, see the

instructions in the coupon booklet (Form

8109) and Pub. 583, Starting a Business and

Keeping Records.

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 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.

Electronic deposit requirement. The fund or

REIT must make electronic deposits of all

depository tax liabilities that occurred after

1999 if it deposited, in 1998, more than

$200,000 in all Federal depository taxes

(such as employment tax, excise tax, or

corporate income tax). If the fund or REIT is

already depositing electronically but its

deposits did not exceed $200,000, the fund

or REIT may continue to do so, or it may

make deposits with Form 8109, Federal Tax

Deposit Coupon. Funds or REITs that exceed

the new $200,000 threshold must continue to

use EFTPS in all later years.

A fund or REIT that is not required to make

electronic deposits may voluntarily participate

in EFTPS. To enroll in EFTPS, call

1-800-555-4477 or 1-800-945-8400. For

general information about EFTPS, call

1-800-829-1040.

Where To File

The Electronic Federal Tax Payment

System (EFTPS) must be used to make

electronic deposits. If the fund or REIT is

required to make electronic deposits and fails

to do so, it may be subject to a 10% penalty.