locable to the reported short-term cap-
ital gain dividend amount is that por-
tion of the excess reported amount 
which bears the same ratio to the ex-
cess reported amount as the reported 
short-term 
capital 
gain 
dividend 
amount bears to the aggregate re-
ported amount. 
‘‘(II) SPECIAL
RULE
FOR
NON-
CALENDAR YEAR TAXPAYERS.—In the 
case of any taxable year which does 
not begin and end in the same cal-
endar year, if the post-December re-
ported amount equals or exceeds the 
excess reported amount for such tax-
able year, subclause (I) shall be ap-
plied by substituting ‘post-December 
reported amount’ for ‘aggregate re-
ported amount’ and no excess re-
ported amount shall be allocated to 
any dividend paid on or before De-
cember 31 of such taxable year. 
‘‘(iv) DEFINITIONS.—For purposes of 
this subparagraph—
‘‘(I) 
REPORTED
SHORT-TERM 
CAPITAL GAIN DIVIDEND AMOUNT.— 
The term ‘reported short-term capital 
gain dividend amount’ means the 
amount reported to its shareholders 
under clause (i) as a short-term cap-
ital gain dividend. 
‘‘(II) 
EXCESS
REPORTED 
AMOUNT.—The term ‘excess reported 
amount’ means the excess of the ag-
gregate reported amount over the 
qualified short-term gain of the com-
pany 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 short- 
term capital gain dividends for the 
taxable year (including short-term 
capital gain dividends paid after the 
close of the taxable year described in 
section 855). 
‘‘(IV) 
POST-DECEMBER
RE-
PORTED
AMOUNT.—The term ‘post-
December reported amount’ means 
the aggregate reported amount deter-
mined by taking into account only 
dividends paid after December 31 of 
the taxable year. 
‘‘(v) TERMINATION.—The term ‘short- 
term capital gain dividend’ shall not in-
clude any dividend with respect to’’. 
(g) CONFORMING AMENDMENTS.—Section 855 is 
amended— 
(1) by striking subsection (c) and redesignating 
subsection (d) as subsection (c), and 
(2) by striking ‘‘, (c) and (d)’’ in subsection (a) 
and inserting ‘‘and (c)’’. 
(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
(i) APPLICATION
OF JGTRRA SUNSET.—Section 
303 of the Jobs and Growth Tax Relief Reconciliation Act 
of 2003 shall apply to the amendments made by subpara-
graphs (B) and (D) of subsection (e)(1) to the same extent 
and in the same manner as section 303 of such Act applies 
to the amendments made by section 302 of such Act.
SEC. 302. EARNINGS AND PROFITS OF REGULATED INVEST-
MENT COMPANIES. 
(a) IN GENERAL.—Paragraph (1) of section 852(c) 
is amended to read as follows: 
‘‘(1) 
TREATMENT
OF
NONDEDUCTIBLE 
ITEMS.— 
‘‘(A) NET CAPITAL LOSS.—If a regulated 
investment company has a net capital loss for 
any taxable year— 
‘‘(i) such net capital loss shall not be 
taken into account for purposes of deter-
mining the company’s earnings and profits, 
and 
‘‘(ii) any capital loss arising on the 
first day of the next taxable year by reason 
of 
clause 
(ii) 
or 
(iii) 
of 
section 
1212(a)(3)(A) shall be treated as so aris-
ing for purposes of determining earnings 
and profits. 
‘‘(B) OTHER NONDEDUCTIBLE ITEMS.— 
‘‘(i) IN GENERAL.—The earnings and 
profits of a regulated investment company 
for any taxable year (but not its accumu-
lated earnings and profits) shall not be re-
duced by any amount which is not allow-
able as a deduction (other than by reason
of section 265 or 171(a)(2)) in computing 
its taxable income for such taxable year. 
‘‘(ii) COORDINATION
WITH
TREAT-
MENT OF NET CAPITAL LOSSES.—Clause 
(i) shall not apply to a net capital loss to 
which subparagraph (A) applies.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (c) of section 852 is amended by 
adding at the end the following new paragraph: 
‘‘(4) REGULATED INVESTMENT COMPANY.—For 
purposes of this subsection, the term ‘regulated in-
vestment company’ includes a domestic corporation 
which is a regulated investment company determined 
without regard to the requirements of subsection 
(a).’’. 
(2) Paragraphs (1)(A) and (2)(A) of section 
871(k) are each amended by inserting ‘‘which meets 
the requirements of section 852(a) for the taxable 
year with respect to which the dividend is paid’’ be-
fore the period at the end. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act.