† HR 4337 EAS 
‘‘(iv) DEFINITIONS.—For purposes of 
this subparagraph— 
‘‘(I) REPORTED SHORT-TERM CAP-
ITAL
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 capital gain 
dividend. 
‘‘(II) 
EXCESS
REPORTED 
AMOUNT.—The term ‘excess reported 
amount’ means the excess of the aggre-
gate reported amount over the qualified 
short-term gain 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 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).
† HR 4337 EAS 
‘‘(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 ‘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.
† HR 4337 EAS 
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 arising 
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
† HR 4337 EAS 
section 265 or 171(a)(2)) in computing its 
taxable income for such taxable year. 
‘‘(ii) COORDINATION WITH TREATMENT 
OF NET CAPITAL LOSSES.—Clause (i) shall 
not apply to a net capital loss to which sub-
paragraph (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 invest-
ment 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’’ before 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.
† HR 4337 EAS 
SEC. 303. PASS-THRU OF EXEMPT-INTEREST DIVIDENDS 
AND FOREIGN TAX CREDITS IN FUND OF 
FUNDS STRUCTURE. 
(a) IN GENERAL.—Section 852 is amended by adding 
at the end the following new subsection: 
‘‘(g) SPECIAL RULES FOR FUND OF FUNDS.— 
‘‘(1) IN GENERAL.—In the case of a qualified 
fund of funds— 
‘‘(A) such fund shall be qualified to pay ex-
empt-interest dividends to its shareholders with-
out regard to whether such fund satisfies the re-
quirements of the first sentence of subsection 
(b)(5), and 
‘‘(B) such fund may elect the application of 
section 853 (relating to foreign tax credit al-
lowed to shareholders) without regard to the re-
quirement of subsection (a)(1) thereof. 
‘‘(2) QUALIFIED FUND OF FUNDS.—For purposes 
of this subsection, the term ‘qualified fund of funds’ 
means a regulated investment company if (at the 
close of each quarter of the taxable year) at least 50 
percent of the value of its total assets is represented 
by interests in other regulated investment compa-
nies.’’.
† HR 4337 EAS 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after the date 
of the enactment of this Act. 
SEC. 304. MODIFICATION OF RULES FOR SPILLOVER DIVI-
DENDS OF REGULATED INVESTMENT COMPA-
NIES. 
(a) DEADLINE FOR DECLARATION OF DIVIDEND.— 
Paragraph (1) of section 855(a) is amended to read as fol-
lows: 
‘‘(1) declares a dividend before the later of— 
‘‘(A) the 15th day of the 9th month fol-
lowing the close of the taxable year, or 
‘‘(B) in the case of an extension of time for 
filing the company’s return for the taxable year, 
the due date for filing such return taking into 
account such extension, and’’. 
(b) DEADLINE FOR DISTRIBUTION OF DIVIDEND.— 
Paragraph (2) of section 855(a) is amended by striking ‘‘the 
first regular dividend payment’’ and inserting ‘‘the first 
dividend payment of the same type of dividend’’. 
(c) SHORT-TERM CAPITAL GAIN.—Subsection (a) of 
section 855 is amended by adding at the end the following: 
‘‘For purposes of paragraph (2), a dividend attributable to 
any short-term capital gain with respect to which a notice 
is required under the Investment Company Act of 1940
† HR 4337 EAS 
(b) LOSSES ON REDEMPTIONS NOT DISALLOWED FOR 
FUND-OF-FUNDS REGULATED INVESTMENT COMPANIES.— 
Paragraph (3) of section 267(f) is amended by adding at 
the end the following new subparagraph: 
‘‘(D) REDEMPTIONS
BY
FUND-OF-FUNDS 
REGULATED
INVESTMENT
COMPANIES.—Except 
to the extent provided in regulations prescribed 
by the Secretary, subsection (a)(1) shall not 
apply to any distribution in redemption of stock 
of a regulated investment company if— 
‘‘(i) such company issues only stock 
which is redeemable upon the demand of the 
stockholder, and 
‘‘(ii) such redemption is upon the de-
mand of another regulated investment com-
pany.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to distributions after the date of the en-
actment of this Act. 
SEC. 307. REPEAL OF PREFERENTIAL DIVIDEND RULE FOR 
PUBLICLY 
OFFERED 
REGULATED 
INVEST-
MENT COMPANIES. 
(a) IN GENERAL.—Subsection (c) of section 562 is 
amended by striking ‘‘The amount’’ and inserting ‘‘Except
† HR 4337 EAS 
in the case of a publicly offered regulated investment com-
pany (as defined in section 67(c)(2)(B)), the amount’’. 
(b) CONFORMING AMENDMENT.—Section 562(c) is 
amended by inserting ‘‘(other than a publicly offered regu-
lated investment company (as so defined))’’ after ‘‘regulated 
investment company’’ in the second sentence thereof. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to distributions in taxable years begin-
ning after the date of the enactment of this Act. 
SEC. 308. ELECTIVE DEFERRAL OF CERTAIN LATE-YEAR 
LOSSES OF REGULATED INVESTMENT COMPA-
NIES. 
(a) IN GENERAL.—Paragraph (8) of section 852(b) is 
amended to read as follows: 
‘‘(8) ELECTIVE
DEFERRAL
OF
CERTAIN
LATE- 
YEAR LOSSES.— 
‘‘(A) IN
GENERAL.—Except as otherwise 
provided by the Secretary, a regulated invest-
ment company may elect for any taxable year to 
treat any portion of any qualified late-year loss 
for such taxable year as arising on the first day 
of the following taxable year for purposes of this 
title.
† HR 4337 EAS 
‘‘(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-Octo-
ber capital loss’ means the greatest of— 
‘‘(i) the net capital loss attributable to 
the portion of the taxable year after October 
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 at-
tributable 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 defined 
in section 4982(e)(5)(B)(ii)) attrib-
utable to the portion of the taxable 
year after October 31, plus
† HR 4337 EAS 
‘‘(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 defined 
in section 4982(e)(5)(B)(i)) attrib-
utable 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 in-
come, gain, or loss described in subpara-
graphs (C), (D)(i)(I), and (D)(ii)(I), and
† HR 4337 EAS 
‘‘(ii) if such company’s taxable year 
ends with the month of December, subpara-
graph (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 dis-
tributions made by a regulated investment company 
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 por-
tion of the taxable year after October 31 and without 
regard to any late-year ordinary loss (as defined in 
subsection (b)(8)(D)).’’ 
(3) Subparagraph (D) of section 871(k)(2) is 
amended by striking the last two sentences and insert-
ing the following: ‘‘For purposes of this subpara-
graph, the net short-term capital gain of the regulated 
investment company shall be computed by treating 
any short-term capital gain dividend includible in 
gross income with respect to stock of another regulated 
investment company as a short-term capital gain.’’.
† HR 4337 EAS 
(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 per-
cent of its net tax-exempt interest and dis-
tributes such dividends on a monthly or 
more frequent basis.
† HR 4337 EAS 
‘‘(ii) AUTHORITY
TO
SHORTEN
RE-
QUIRED
HOLDING
PERIOD
WITH
RESPECT 
TO OTHER COMPANIES.—’’. 
(b) CONFORMING AMENDMENT.—Clause (ii) of section 
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
† HR 4337 EAS 
(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 por-
tion of the calendar year after October 31 shall 
be treated as arising on January 1 of the fol-
lowing calendar year.
† HR 4337 EAS 
‘‘(B) SPECIFIED GAINS AND LOSSES.—For 
purposes of this paragraph— 
‘‘(i) SPECIFIED GAIN.—The term ‘spec-
ified gain’ means ordinary gain from the 
sale, exchange, or other disposition of prop-
erty (including the termination of a posi-
tion with respect to such property). Such 
term shall include any foreign currency 
gain attributable to a section 988 trans-
action (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 prop-
erty (including the termination of a posi-
tion with respect to such property). Such 
term shall include any foreign currency loss 
attributable to a section 988 transaction 
(within the meaning of section 988) and 
any amount allowable as a deduction 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
† HR 4337 EAS 
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 making 
an election under paragraph (4), the preceding 
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 sec-
tions 1256 and 1296 and any other provision of 
this title (or regulations thereunder) 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 regulated
† HR 4337 EAS 
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 reason 
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 COMPANY. 
(a) IN GENERAL.—Subsection (c) of section 4982 is 
amended by adding at the end the following new paragraph: 
‘‘(4) SPECIAL RULE FOR ESTIMATED TAX PAY-
MENTS.—