of the following taxable year for purposes of 
this title. 
‘‘(B) QUALIFIED
LATE-YEAR
LOSS.—For 
purposes of this paragraph, the term ‘qualified 
late-year loss’ means— 
‘‘(i) any post-October capital loss, and 
‘‘(ii) any late-year ordinary loss. 
‘‘(C) POST-OCTOBER CAPITAL LOSS.—For 
purposes of this paragraph, the term ‘post-Oc-
tober capital loss’ means the greatest of— 
‘‘(i) the net capital loss attributable to 
the portion of the taxable year after Octo-
ber 31, 
‘‘(ii) the net long-term capital loss at-
tributable to such portion of the taxable 
year, or 
‘‘(iii) the net short-term capital loss 
attributable to such portion of the taxable 
year. 
‘‘(D) LATE-YEAR
ORDINARY
LOSS.—For 
purposes of this paragraph, the term ‘late-year 
ordinary loss’ means the excess (if any) of— 
‘‘(i) the sum of— 
‘‘(I) the specified losses (as de-
fined in section 4982(e)(5)(B)(ii)) at-
tributable to the portion of the taxable 
year after October 31, plus 
‘‘(II) the ordinary losses not de-
scribed in subclause (I) attributable to 
the portion of the taxable year after 
December 31, over 
‘‘(ii) the sum of— 
‘‘(I) the specified gains (as de-
fined in section 4982(e)(5)(B)(i)) at-
tributable to the portion of the taxable 
year after October 31, plus 
‘‘(II) the ordinary income not de-
scribed in subclause (I) attributable to 
the portion of the taxable year after 
December 31. 
‘‘(E) SPECIAL RULE FOR COMPANIES DE-
TERMINING REQUIRED CAPITAL GAIN DISTRIBU-
TIONS ON TAXABLE YEAR BASIS.—In the case 
of a company to which an election under section 
4982(e)(4) applies— 
‘‘(i) if such company’s taxable year 
ends with the month of November, the 
amount of qualified late-year losses (if 
any) shall be computed without regard to 
any income, gain, or loss described in sub-
paragraphs (C), (D)(i)(I), and (D)(ii)(I), 
and 
‘‘(ii) if such company’s taxable year 
ends with the month of December, sub-
paragraph (A) shall not apply.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (b) of section 852 is amended by 
striking paragraph (10). 
(2) Paragraph (2) of section 852(c) is amended 
by striking the first sentence and inserting the fol-
lowing: ‘‘For purposes of applying this chapter to 
distributions made by a regulated investment com-
pany with respect to any calendar year, the earnings 
and profits of such company shall be determined 
without regard to any net capital loss attributable to 
the portion of the taxable year after October 31 and 
without regard to any late-year ordinary loss (as de-
fined in subsection (b)(8)(D)).’’ 
(3) Subparagraph (D) of section 871(k)(2) is 
amended by striking the last two sentences and in-
serting the following: ‘‘For purposes of this subpara-
graph, the net short-term capital gain of the regu-
lated investment company shall be computed by 
treating any short-term capital gain dividend includ-
ible in gross income with respect to stock of another
regulated investment company as a short-term cap-
ital gain.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 309. EXCEPTION TO HOLDING PERIOD REQUIREMENT 
FOR CERTAIN REGULARLY DECLARED EX-
EMPT-INTEREST DIVIDENDS. 
(a) IN GENERAL.—Subparagraph (E) of section 
852(b)(4) is amended by striking all that precedes ‘‘In the 
case of a regulated investment company’’ and inserting the 
following: 
‘‘(E) EXCEPTION TO HOLDING PERIOD RE-
QUIREMENT
FOR
CERTAIN
REGULARLY
DE-
CLARED EXEMPT-INTEREST DIVIDENDS.— 
‘‘(i) DAILY DIVIDEND COMPANIES.— 
Except as otherwise provided by regula-
tions, subparagraph (B) shall not apply 
with respect to a regular dividend paid by 
a regulated investment company which de-
clares exempt-interest dividends on a daily 
basis in an amount equal to at least 90 
percent of its net tax-exempt interest and 
distributes such dividends on a monthly or 
more frequent basis.
‘‘(ii) AUTHORITY
TO
SHORTEN
RE-
QUIRED HOLDING PERIOD WITH RESPECT 
TO OTHER COMPANIES.—’’. 
(b) CONFORMING AMENDMENT.—Clause (ii) of sec-
tion 852(b)(4)(E), as amended by subsection (a), is 
amended by inserting ‘‘(other than a company described 
in clause (i))’’ after ‘‘regulated investment company’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to losses incurred on shares of 
stock for which the taxpayer’s holding period begins after 
the date of the enactment of this Act. 
TITLE IV—MODIFICATIONS RE-
LATED TO EXCISE TAX APPLI-
CABLE TO REGULATED IN-
VESTMENT COMPANIES 
SEC. 401. EXCISE TAX EXEMPTION FOR CERTAIN REGU-
LATED INVESTMENT COMPANIES OWNED BY 
TAX EXEMPT ENTITIES. 
(a) IN GENERAL.—Subsection (f) of section 4982 is 
amended— 
(1) by striking ‘‘either’’ in the matter preceding 
paragraph (1), 
(2) by striking ‘‘or’’ at the end of paragraph 
(1),
(3) by striking the period at the end of para-
graph (2), and 
(4) by inserting after paragraph (2) the fol-
lowing new paragraphs: 
‘‘(3) any other tax-exempt entity whose owner-
ship of beneficial interests in the company would not 
preclude the application of section 817(h)(4), or 
‘‘(4) another regulated investment company de-
scribed in this subsection.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to calendar years beginning after 
the date of the enactment of this Act. 
SEC. 402. DEFERRAL OF CERTAIN GAINS AND LOSSES OF 
REGULATED INVESTMENT COMPANIES FOR 
EXCISE TAX PURPOSES. 
(a) IN GENERAL.—Subsection (e) of section 4982 is 
amended by striking paragraphs (5) and (6) and inserting 
the following new paragraphs: 
‘‘(5) TREATMENT
OF
SPECIFIED
GAINS
AND 
LOSSES AFTER OCTOBER 31 OF CALENDAR YEAR.— 
‘‘(A) IN GENERAL.—Any specified gain or 
specified loss which (but for this paragraph) 
would be properly taken into account for the 
portion of the calendar year after October 31
shall be treated as arising on January 1 of the 
following calendar year. 
‘‘(B) SPECIFIED GAINS AND LOSSES.—For 
purposes of this paragraph— 
‘‘(i) 
SPECIFIED
GAIN.—The 
term 
‘specified gain’ means ordinary gain from 
the sale, exchange, or other disposition of 
property (including the termination of a 
position with respect to such property). 
Such term shall include any foreign cur-
rency gain attributable to a section 988 
transaction (within the meaning of section 
988) and any amount includible in gross 
income under section 1296(a)(1). 
‘‘(ii) SPECIFIED
LOSS.—The term 
‘specified loss’ means ordinary loss from 
the sale, exchange, or other disposition of 
property (including the termination of a 
position with respect to such property). 
Such term shall include any foreign cur-
rency loss attributable to a section 988 
transaction (within the meaning of section 
988) and any amount allowable as a de-
duction under section 1296(a)(2).
‘‘(C) SPECIAL
RULE
FOR
COMPANIES 
ELECTING TO USE THE TAXABLE YEAR.—In the 
case of any company making an election under 
paragraph (4), subparagraph (A) shall be ap-
plied by substituting the last day of the com-
pany’s taxable year for October 31. 
‘‘(6) TREATMENT
OF
MARK
TO
MARKET 
GAIN.— 
‘‘(A) IN GENERAL.—For purposes of deter-
mining a regulated investment company’s ordi-
nary income, notwithstanding paragraph (1)(C), 
each specified mark to market provision shall be 
applied as if such company’s taxable year ended 
on October 31. In the case of a company mak-
ing an election under paragraph (4), the pre-
ceding sentence shall be applied by substituting 
the last day of the company’s taxable year for 
October 31. 
‘‘(B) SPECIFIED MARK TO MARKET PROVI-
SION.—For purposes of this paragraph, the 
term ‘specified mark to market provision’ 
means sections 1256 and 1296 and any other 
provision of this title (or regulations there-
under) which treats property as disposed of on 
the last day of the taxable year.
‘‘(7) ELECTIVE DEFERRAL OF CERTAIN ORDI-
NARY LOSSES.—Except as provided in regulations 
prescribed by the Secretary, in the case of a regu-
lated investment company which has a taxable year 
other than the calendar year— 
‘‘(A) such company may elect to determine 
its ordinary income for the calendar year with-
out regard to any net ordinary loss (determined 
without regard to specified gains and losses 
taken into account under paragraph (5)) which 
is attributable to the portion of such calendar 
year which is after the beginning of the taxable 
year which begins in such calendar year, and 
‘‘(B) any amount of net ordinary loss not 
taken into account for a calendar year by rea-
son of subparagraph (A) shall be treated as 
arising on the 1st day of the following calendar 
year.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar years beginning after 
the date of the enactment of this Act.
SEC. 403. DISTRIBUTED AMOUNT FOR EXCISE TAX PUR-
POSES DETERMINED ON BASIS OF TAXES 
PAID BY REGULATED INVESTMENT COM-
PANY. 
(a) IN GENERAL.—Subsection (c) of section 4982 is 
amended by adding at the end the following new para-
graph: 
‘‘(4) SPECIAL RULE FOR ESTIMATED TAX PAY-
MENTS.— 
‘‘(A) IN GENERAL.—In the case of a regu-
lated investment company which elects the ap-
plication of this paragraph for any calendar 
year— 
‘‘(i) the distributed amount with re-
spect to such company for such calendar 
year shall be increased by the amount on 
which qualified estimated tax payments are 
made by such company during such cal-
endar year, and 
‘‘(ii) the distributed amount with re-
spect to such company for the following 
calendar year shall be reduced by the 
amount of such increase. 
‘‘(B) QUALIFIED
ESTIMATED
TAX
PAY-
MENTS.—For purposes of this paragraph, the 
term ‘qualified estimated tax payments’ means,
with respect to any calendar year, payments of 
estimated tax of a tax described in paragraph 
(1)(B) for any taxable year which begins (but 
does not end) in such calendar year.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to calendar years beginning after 
the date of the enactment of this Act. 
SEC. 404. INCREASE IN REQUIRED DISTRIBUTION OF CAP-
ITAL GAIN NET INCOME. 
(a) IN GENERAL.—Subparagraph (B) of section 
4982(b)(1) is amended by striking ‘‘98 percent’’ and in-
serting ‘‘98.2 percent’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar years beginning after 
the date of the enactment of this Act. 
TITLE V—OTHER PROVISIONS 
SEC. 501. REPEAL OF ASSESSABLE PENALTY WITH RE-
SPECT TO LIABILITY FOR TAX OF REGU-
LATED INVESTMENT COMPANIES. 
(a) IN GENERAL.—Part I of subchapter B of chapter 
68 is amended by striking section 6697 (and by striking 
the item relating to such section in the table of sections 
of such part). 
(b) CONFORMING
AMENDMENT.—Section 860 is 
amended by striking subsection (j).
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 502. MODIFICATION OF SALES LOAD BASIS DEFERRAL 
RULE FOR REGULATED INVESTMENT COMPA-
NIES. 
(a) IN GENERAL.—Subparagraph (C) of section 
852(f)(1) is amended by striking ‘‘subsequently acquires’’ 
and inserting ‘‘acquires, during the period beginning on 
the date of the disposition referred to in subparagraph (B) 
and ending on January 31 of the calendar year following 
the calendar year that includes the date of such disposi-
tion,’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to charges incurred in taxable 
years beginning after the date of the enactment of this 
Act. 
TITLE VI—PAYGO COMPLIANCE 
SEC. 601. PAYGO COMPLIANCE. 
The budgetary effects of this Act, for the purpose of 
complying with the Statutory Pay-As-You-Go Act of 2010, 
shall be determined by reference to the latest statement 
titled ‘‘Budgetary Effects of PAYGO Legislation’’ for this 
Act, submitted for printing in the Congressional Record 
by the Chairman of the House Budget Committee, pro-
vided that such statement has been submitted prior to the 
vote on passage. 
Passed the House of Representatives September 28, 
2010. 
Attest: 
Clerk.
111TH CONGRESS 
2D SESSION 
H. R. 4337 
AN ACT 
To amend the Internal Revenue Code of 1986 to 
modify certain rules applicable to regulated in-
vestment companies, and for other purposes.