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 1997 or tax year beginning , 1997, ending , 19

Name of fund/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) Kind of property and description (Example,

100 shares of Z Company)

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 section

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 Please 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 social security number 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 (1997)

©

©

©

(d) Sales price

(see instructions)

Amount of undistributed capital gains not designated under section 852(b)(3)(D) or section

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

1997
Form 2438 (1997) Page 2

General Instructions

Section references are to the Internal Revenue

Code unless otherwise noted.

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 1997 return for

calendar year 1997 and fiscal years that begin in

1997 and end in 1998. 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(h)), 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 When and 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 to figure income tax

on undistributed capital gains designated under

section 852(b)(3)(D) or by REITs under 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.

If the fund or REIT has any net short-term capital

gain on line 4, enter it on line 1 of Schedule D

(Form 1120) as “Net short-term capital gain from

line 4, Form 2438.” For information on a

short-term capital loss, see the Schedule D

(Form 1120) instructions.

When and Where 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 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 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 the 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.

Electronic deposit requirement. The fund or

REIT must make electronic deposits of all

depository tax liabilities that occur after 1997 if:

Some funds or REITs are required to

electronically deposit all depository taxes,

including corporation income tax payments.

● 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 the fund will file its Form

1120-RIC or the REIT will file its Form

1120-REIT. Attach a copy of Form 2438 to the

fund’s Form 1120-RIC or the REIT’s Form

1120-REIT.

Changes To Note

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. However, no penalty

will be imposed prior to July 1, 1998, if the fund

or REIT was first required to use EFTPS on or

after July 1, 1997. Funds or REITs that are not

required to make electronic deposits may

voluntarily participate in EFTPS. To enroll in

EFTPS, call 1-800-945-8400 or 1-800-555-4477.

For general information about EFTPS, call

1-800-829-1040.

● It deposited more than $50,000 in social

security, Medicare, and withheld income taxes in

1996, or

● It did not deposit social security, Medicare, or

withheld income taxes in 1995 or 1996, but

deposited more than $50,000 in other taxes

under section 6302 (such as the corporate

income tax) in either year. (See Regulations

section 31.6302-1(h) for more information.)

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.

● It was required to electronically deposit taxes

in prior years,

Penalty for Late Filing of Return

A fund or REIT that does not file its tax return by

the due date, including extensions, may be

penalized 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.

● For tax years beginning after August 5, 1997,

the Taxpayer Relief Act of 1997 provides that a

real estate investment trust (REIT) may now elect

under section 857(b)(3)(D) to retain and pay tax

on the net long-term capital gains it received

during the tax year, just as a regulated

investment company (RIC) is currently permitted

to do.

● The penalty for failure to make electronic

deposits of depository taxes using the Electronic

Federal Tax Payment System (EFTPS) has been

temporarily waived for filers who were required

to first use EFTPS on or after July 1, 1997. For

more information, see Electronic deposit

requirement below.

Who Must File

RICs file Form 2438 if the fund is electing to

designate undistributed capital gains under

section 852(b)(3)(D). For tax years beginning after

August 5, 1997, REITs also file the form to make

the undistributed capital gains designation under

section 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(h) and to any RIC that

does not have more than one portfolio of assets.