† HR 4337 EAS 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), a capital gain dividend is 
any dividend, or part thereof, which is re-
ported by the company as a capital gain 
dividend in written statements furnished to 
its shareholders. 
‘‘(ii) EXCESS REPORTED AMOUNTS.—If 
the aggregate reported amount with respect 
to the company for any taxable year exceeds 
the net capital gain of the company for such 
taxable year, a capital gain dividend is the 
excess of— 
‘‘(I) the reported capital gain div-
idend amount, over 
‘‘(II) the excess reported amount 
which is allocable to such reported cap-
ital gain dividend amount. 
‘‘(iii) ALLOCATION
OF
EXCESS
RE-
PORTED AMOUNT.— 
‘‘(I) IN GENERAL.—Except as pro-
vided in subclause (II), the excess re-
ported amount (if any) which is allo-
cable to the reported capital gain divi-
dend amount is that portion of the ex-
cess reported amount which bears the
† HR 4337 EAS 
same ratio to the excess reported 
amount as the reported capital gain 
dividend amount bears to the aggregate 
reported amount. 
‘‘(II) SPECIAL RULE FOR NONCAL-
ENDAR YEAR TAXPAYERS.—In the case 
of any taxable year which does not 
begin and end in the same calendar 
year, if the post-December reported 
amount equals or exceeds the excess re-
ported amount for such taxable year, 
subclause (I) shall be applied by sub-
stituting 
‘post-December 
reported 
amount’ 
for 
‘aggregate 
reported 
amount’ 
and 
no 
excess 
reported 
amount shall be allocated to any divi-
dend paid on or before December 31 of 
such taxable year. 
‘‘(iv) DEFINITIONS.—For purposes of 
this subparagraph— 
‘‘(I) REPORTED
CAPITAL
GAIN 
DIVIDEND
AMOUNT.—The term ‘re-
ported capital gain dividend amount’ 
means the amount reported to its
† HR 4337 EAS 
shareholders under clause (i) as a cap-
ital gain dividend. 
‘‘(II) 
EXCESS
REPORTED 
AMOUNT.—The term ‘excess reported 
amount’ means the excess of the aggre-
gate reported amount over the net cap-
ital gain of the company for the tax-
able year. 
‘‘(III) 
AGGREGATE
REPORTED 
AMOUNT.—The term ‘aggregate re-
ported amount’ means the aggregate 
amount of dividends reported by the 
company under clause (i) as capital 
gain dividends for the taxable year (in-
cluding capital gain dividends paid 
after the close of the taxable year de-
scribed in section 855). 
‘‘(IV) POST-DECEMBER REPORTED 
AMOUNT.—The term ‘post-December re-
ported amount’ means the aggregate 
reported amount determined by taking 
into account only dividends paid after 
December 31 of the taxable year. 
‘‘(v) ADJUSTMENT
FOR
DETERMINA-
TIONS.—If there is an increase in the excess
† HR 4337 EAS 
described in subparagraph (A) for the tax-
able year which results from a determina-
tion (as defined in section 860(e)), the com-
pany may, subject to the limitations of this 
subparagraph, increase the amount of cap-
ital gain dividends reported under clause 
(i). 
‘‘(vi) SPECIAL RULE FOR LOSSES LATE 
IN THE CALENDAR YEAR.—For special rule 
for certain losses after October 31, see para-
graph (8).’’. 
(2) CONFORMING
AMENDMENT.—Subparagraph 
(B) of section 860(f)(2) is amended by inserting ‘‘or 
reported (as the case may be)’’ after ‘‘designated’’. 
(b) EXEMPT-INTEREST
DIVIDENDS.—Subparagraph 
(A) of section 852(b)(5) is amended to read as follows: 
‘‘(A) DEFINITION
OF
EXEMPT-INTEREST 
DIVIDEND.— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), an exempt-interest dividend 
is any dividend or part thereof (other than 
a capital gain dividend) paid by a regu-
lated investment company and reported by 
the company as an exempt-interest dividend
† HR 4337 EAS 
in written statements furnished to its share-
holders. 
‘‘(ii) EXCESS REPORTED AMOUNTS.—If 
the aggregate reported amount with respect 
to the company for any taxable year exceeds 
the exempt interest of the company for such 
taxable year, an exempt-interest dividend is 
the excess of— 
‘‘(I) the reported exempt-interest 
dividend amount, over 
‘‘(II) the excess reported amount 
which is allocable to such reported ex-
empt-interest dividend amount. 
‘‘(iii) ALLOCATION
OF
EXCESS
RE-
PORTED AMOUNT.— 
‘‘(I) IN GENERAL.—Except as pro-
vided in subclause (II), the excess re-
ported amount (if any) which is allo-
cable to the reported exempt-interest 
dividend amount is that portion of the 
excess reported amount which bears the 
same ratio to the excess reported 
amount as the reported exempt-interest 
dividend amount bears to the aggregate 
reported amount.
† HR 4337 EAS 
gate reported amount over the exempt 
interest of the company for the taxable 
year. 
‘‘(III) 
AGGREGATE
REPORTED 
AMOUNT.—The term ‘aggregate re-
ported amount’ means the aggregate 
amount of dividends reported by the 
company under clause (i) as exempt- 
interest dividends for the taxable year 
(including exempt-interest dividends 
paid after the close of the taxable year 
described in section 855). 
‘‘(IV) POST-DECEMBER REPORTED 
AMOUNT.—The term ‘post-December re-
ported amount’ means the aggregate 
reported amount determined by taking 
into account only dividends paid after 
December 31 of the taxable year. 
‘‘(V) 
EXEMPT
INTEREST.—The 
term ‘exempt interest’ means, with re-
spect to any regulated investment com-
pany, the excess of the amount of inter-
est excludable from gross income under 
section 103(a) over the amounts dis-
† HR 4337 EAS 
allowed as deductions under sections 
265 and 171(a)(2).’’. 
(c) FOREIGN TAX CREDITS.— 
(1) IN GENERAL.—Subsection (c) of section 853 
is amended— 
(A) by striking ‘‘so designated by the com-
pany in a written notice mailed to its share-
holders not later than 60 days after the close of 
the taxable year’’ and inserting ‘‘so reported by 
the company in a written statement furnished to 
such shareholder’’, and 
(B) by striking ‘‘NOTICE’’ in the heading 
and inserting ‘‘STATEMENTS’’. 
(2) CONFORMING AMENDMENTS.—Subsection (d) 
of section 853 is amended— 
(A) by striking ‘‘and the notice to share-
holders required by subsection (c)’’ in the text 
thereof, and 
(B) by striking ‘‘AND NOTIFYING SHARE-
HOLDERS’’ in the heading thereof. 
(d) CREDITS FOR TAX CREDIT BONDS.— 
(1) IN GENERAL.—Subsection (c) of section 853A 
is amended— 
(A) by striking ‘‘so designated by the regu-
lated investment company in a written notice
† HR 4337 EAS 
mailed to its shareholders not later than 60 days 
after the close of its taxable year’’ and inserting 
‘‘so reported by the regulated investment com-
pany in a written statement furnished to such 
shareholder’’, and 
(B) by striking ‘‘NOTICE’’ in the heading 
and inserting ‘‘STATEMENTS’’. 
(2) CONFORMING AMENDMENTS.—Subsection (d) 
of section 853A is amended— 
(A) by striking ‘‘and the notice to share-
holders required by subsection (c)’’ in the text 
thereof, and 
(B) by striking ‘‘AND NOTIFYING SHARE-
HOLDERS’’ in the heading thereof. 
(e) DIVIDEND RECEIVED DEDUCTION, ETC.— 
(1) IN
GENERAL.—Paragraph (1) of section 
854(b) is amended— 
(A) by striking ‘‘designated under this sub-
paragraph by the regulated investment com-
pany’’ in subparagraph (A) and inserting ‘‘re-
ported by the regulated investment company as 
eligible for such deduction in written statements 
furnished to its shareholders’’, 
(B) by striking ‘‘designated by the regulated 
investment company’’ in subparagraph (B)(i)
† HR 4337 EAS 
and inserting ‘‘reported by the regulated invest-
ment company as qualified dividend income in 
written statements furnished to its shareholders’’, 
(C) by striking ‘‘designated’’ in subpara-
graph (C)(i) and inserting ‘‘reported’’, and 
(D) by striking ‘‘designated’’ in subpara-
graph (C)(ii) and inserting ‘‘reported’’. 
(2) CONFORMING AMENDMENTS.—Subsection (b) 
of section 854 is amended by striking paragraph (2) 
and by redesignating paragraphs (3), (4), and (5), as 
paragraphs (2), (3), and (4), respectively. 
(f) DIVIDENDS PAID
TO CERTAIN FOREIGN PER-
SONS.— 
(1) INTEREST-RELATED
DIVIDENDS.—Subpara-
graph (C) of section 871(k)(1) is amended by striking 
all that precedes ‘‘any taxable year of the company 
beginning’’ and inserting the following: 
‘‘(C) INTEREST-RELATED
DIVIDEND.—For 
purposes of this paragraph— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), an interest related dividend 
is any dividend, or part thereof, which is 
reported by the company as an interest re-
lated dividend in written statements fur-
nished to its shareholders.
† HR 4337 EAS 
‘‘(ii) EXCESS REPORTED AMOUNTS.—If 
the aggregate reported amount with respect 
to the company for any taxable year exceeds 
the qualified net interest income of the com-
pany for such taxable year, an interest re-
lated dividend is the excess of— 
‘‘(I) the reported interest related 
dividend amount, over 
‘‘(II) the excess reported amount 
which is allocable to such reported in-
terest related dividend amount. 
‘‘(iii) ALLOCATION
OF
EXCESS
RE-
PORTED AMOUNT.— 
‘‘(I) IN GENERAL.—Except as pro-
vided in subclause (II), the excess re-
ported amount (if any) which is allo-
cable to the reported interest related 
dividend amount is that portion of the 
excess reported amount which bears the 
same ratio to the excess reported 
amount as the reported interest related 
dividend amount bears to the aggregate 
reported amount. 
‘‘(II) SPECIAL RULE FOR NONCAL-
ENDAR YEAR TAXPAYERS.—In the case
† HR 4337 EAS 
of any taxable year which does not 
begin and end in the same calendar 
year, if the post-December reported 
amount equals or exceeds the excess re-
ported amount for such taxable year, 
subclause (I) shall be applied by sub-
stituting 
‘post-December 
reported 
amount’ 
for 
‘aggregate 
reported 
amount’ 
and 
no 
excess 
reported 
amount shall be allocated to any divi-
dend paid on or before December 31 of 
such taxable year. 
‘‘(iv) DEFINITIONS.—For purposes of 
this subparagraph— 
‘‘(I) REPORTED
INTEREST
RE-
LATED DIVIDEND AMOUNT.—The term 
‘reported 
interest 
related 
dividend 
amount’ means the amount reported to 
its shareholders under clause (i) as an 
interest related dividend. 
‘‘(II) 
EXCESS
REPORTED 
AMOUNT.—The term ‘excess reported 
amount’ means the excess of the aggre-
gate reported amount over the qualified
† HR 4337 EAS 
net interest income of the company for 
the taxable year. 
‘‘(III) 
AGGREGATE
REPORTED 
AMOUNT.—The term ‘aggregate re-
ported amount’ means the aggregate 
amount of dividends reported by the 
company under clause (i) as interest 
related dividends for the taxable year 
(including interest related dividends 
paid after the close of the taxable year 
described in section 855). 
‘‘(IV) POST-DECEMBER REPORTED 
AMOUNT.—The term ‘post-December re-
ported amount’ means the aggregate 
reported amount determined by taking 
into account only dividends paid after 
December 31 of the taxable year. 
‘‘(v) TERMINATION.—The term ‘interest 
related dividend’ shall not include any divi-
dend with respect to’’. 
(2) SHORT-TERM
CAPITAL
GAIN
DIVIDENDS.— 
Subparagraph (C) of section 871(k)(2) is amended by 
striking all that precedes ‘‘any taxable year of the 
company beginning’’ and inserting the following:
† HR 4337 EAS 
‘‘(C) SHORT-TERM
CAPITAL
GAIN
DIVI-
DEND.—For purposes of this paragraph— 
‘‘(i) IN GENERAL.—Except as provided 
in clause (ii), the term ‘short-term capital 
gain dividend’ means any dividend, or part 
thereof, which is reported by the company 
as a short-term capital gain dividend in 
written statements furnished to its share-
holders. 
‘‘(ii) EXCESS REPORTED AMOUNTS.—If 
the aggregate reported amount with respect 
to the company for any taxable year exceeds 
the qualified short-term gain of the com-
pany for such taxable year, the term ‘short- 
term capital gain dividend’ means the ex-
cess of— 
‘‘(I) the reported short-term cap-
ital gain dividend amount, over 
‘‘(II) the excess reported amount 
which is allocable to such reported 
short-term 
capital 
gain 
dividend 
amount. 
‘‘(iii) ALLOCATION
OF
EXCESS
RE-
PORTED AMOUNT.—
† HR 4337 EAS 
‘‘(I) IN GENERAL.—Except as pro-
vided in subclause (II), the excess re-
ported amount (if any) which is allo-
cable to the reported short-term capital 
gain dividend amount is that portion 
of the excess reported amount which 
bears the same ratio to the excess re-
ported amount as the reported short- 
term capital gain dividend amount 
bears to the aggregate reported amount. 
‘‘(II) SPECIAL RULE FOR NONCAL-
ENDAR YEAR TAXPAYERS.—In the case 
of any taxable year which does not 
begin and end in the same calendar 
year, if the post-December reported 
amount equals or exceeds the excess re-
ported amount for such taxable year, 
subclause (I) shall be applied by sub-
stituting 
‘post-December 
reported 
amount’ 
for 
‘aggregate 
reported 
amount’ 
and 
no 
excess 
reported 
amount shall be allocated to any divi-
dend paid on or before December 31 of 
such taxable year.