Regulated Investment Company Modernization Act of 2010
PL 111-325 (H.R.4337), enacted 12/22/2010

124 STAT. 3537 
PUBLIC LAW 111–325—DEC. 22, 2010 
Public Law 111–325 
111th Congress 
An Act 
To amend the Internal Revenue Code of 1986 to modify certain rules applicable 
to regulated investment companies, and for other purposes. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE, ETC. 
(a) SHORT TITLE.—This Act may be cited as the ‘‘Regulated 
Investment Company Modernization Act of 2010’’. 
(b) REFERENCE.—Except as otherwise expressly provided, when-
ever in this Act an amendment or repeal is expressed in terms 
of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents for this Act 
is as follows: 
Sec. 1. Short title, etc. 
TITLE I—CAPITAL LOSS CARRYOVERS OF REGULATED INVESTMENT 
COMPANIES 
Sec. 101. Capital loss carryovers of regulated investment companies. 
TITLE II—MODIFICATION OF GROSS INCOME AND ASSET TESTS OF 
REGULATED INVESTMENT COMPANIES 
Sec. 201. Savings provisions for failures of regulated investment companies to sat-
isfy gross income and asset tests. 
TITLE III—MODIFICATION OF RULES RELATED TO DIVIDENDS AND OTHER 
DISTRIBUTIONS 
Sec. 301. Modification of dividend designation requirements and allocation rules for 
regulated investment companies. 
Sec. 302. Earnings and profits of regulated investment companies. 
Sec. 303. Pass-thru of exempt-interest dividends and foreign tax credits in fund of 
funds structure. 
Sec. 304. Modification of rules for spillover dividends of regulated investment com-
panies. 
Sec. 305. Return of capital distributions of regulated investment companies. 
Sec. 306. Distributions in redemption of stock of a regulated investment company. 
Sec. 307. Repeal of preferential dividend rule for publicly offered regulated invest-
ment companies. 
Sec. 308. Elective deferral of certain late-year losses of regulated investment com-
panies. 
Sec. 309. Exception to holding period requirement for certain regularly declared ex-
empt-interest dividends. 
TITLE IV—MODIFICATIONS RELATED TO EXCISE TAX APPLICABLE TO 
REGULATED INVESTMENT COMPANIES 
Sec. 401. Excise tax exemption for certain regulated investment companies owned 
by tax exempt entities. 
Regulated 
Investment 
Company 
Modernization 
Act of 2010. 
26 USC 1 note. 
Dec. 22, 2010 
[H.R. 4337] 
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124 STAT. 3538 
PUBLIC LAW 111–325—DEC. 22, 2010 
Sec. 402. Deferral of certain gains and losses of regulated investment companies for 
excise tax purposes. 
Sec. 403. Distributed amount for excise tax purposes determined on basis of taxes 
paid by regulated investment company. 
Sec. 404. Increase in required distribution of capital gain net income. 
TITLE V—OTHER PROVISIONS 
Sec. 501. Repeal of assessable penalty with respect to liability for tax of regulated 
investment companies. 
Sec. 502. Modification of sales load basis deferral rule for regulated investment 
companies. 
TITLE I—CAPITAL LOSS CARRYOVERS 
OF REGULATED INVESTMENT COMPA-
NIES 
SEC. 101. CAPITAL LOSS CARRYOVERS OF REGULATED INVESTMENT 
COMPANIES. 
(a) IN GENERAL.—Subsection (a) of section 1212 is amended 
by redesignating paragraph (3) as paragraph (4) and by inserting 
after paragraph (2) the following new paragraph: 
‘‘(3) REGULATED INVESTMENT COMPANIES.— 
‘‘(A) IN GENERAL.—If a regulated investment company 
has a net capital loss for any taxable year— 
‘‘(i) paragraph (1) shall not apply to such loss, 
‘‘(ii) the excess of the net short-term capital loss 
over the net long-term capital gain for such year shall 
be a short-term capital loss arising on the first day 
of the next taxable year, and 
‘‘(iii) the excess of the net long-term capital loss 
over the net short-term capital gain for such year 
shall be a long-term capital loss arising on the first 
day of the next taxable year. 
‘‘(B) COORDINATION WITH GENERAL RULE.—If a net cap-
ital loss to which paragraph (1) applies is carried over 
to a taxable year of a regulated investment company— 
‘‘(i) LOSSES TO WHICH THIS PARAGRAPH APPLIES.— 
Clauses (ii) and (iii) of subparagraph (A) shall be 
applied without regard to any amount treated as a 
short-term capital loss under paragraph (1). 
‘‘(ii) LOSSES TO WHICH GENERAL RULE APPLIES.— 
Paragraph (1) shall be applied by substituting ‘net 
capital loss for the loss year or any taxable year there-
after (other than a net capital loss to which paragraph 
(3)(A) applies)’ for ‘net capital loss for the loss year 
or any taxable year thereafter’.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subparagraph (C) of section 1212(a)(1) is amended to 
read as follows: 
‘‘(C) a capital loss carryover to each of the 10 taxable 
years succeeding the loss year, but only to the extent 
such loss is attributable to a foreign expropriation loss,’’. 
(2) Paragraph (10) of section 1222 is amended by striking 
‘‘section 1212’’ and inserting ‘‘section 1212(a)(1)’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to net capital 
26 USC 1212 
note. 
Applicability. 
26 USC 1212. 
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124 STAT. 3539 
PUBLIC LAW 111–325—DEC. 22, 2010 
losses for taxable years beginning after the date of the enact-
ment of this Act. 
(2) COORDINATION
RULES.—Subparagraph (B) of section 
1212(a)(3) of the Internal Revenue Code of 1986, as added 
by this section, shall apply to taxable years beginning after 
the date of the enactment of this Act. 
TITLE II—MODIFICATION OF GROSS IN-
COME AND ASSET TESTS OF REGU-
LATED INVESTMENT COMPANIES 
SEC. 201. SAVINGS PROVISIONS FOR FAILURES OF REGULATED 
INVESTMENT COMPANIES TO SATISFY GROSS INCOME AND 
ASSET TESTS. 
(a) ASSET TEST.—Subsection (d) of section 851 is amended— 
(1) by striking ‘‘A corporation which meets’’ and inserting 
the following: 
‘‘(1) IN GENERAL.—A corporation which meets’’, and 
(2) by adding at the end the following new paragraph: 
‘‘(2) SPECIAL
RULES
REGARDING
FAILURE
TO
SATISFY 
REQUIREMENTS.—If paragraph (1) does not preserve a corpora-
tion’s status as a regulated investment company for any par-
ticular quarter— 
‘‘(A) IN
GENERAL.—A corporation that fails to meet 
the requirements of subsection (b)(3) (other than a failure 
described in subparagraph (B)(i)) for such quarter shall 
nevertheless be considered to have satisfied the require-
ments of such subsection for such quarter if— 
‘‘(i) following the corporation’s identification of the 
failure to satisfy the requirements of such subsection 
for such quarter, a description of each asset that causes 
the corporation to fail to satisfy the requirements of 
such subsection at the close of such quarter is set 
forth in a schedule for such quarter filed in the manner 
provided by the Secretary, 
‘‘(ii) the failure to meet the requirements of such 
subsection for such quarter is due to reasonable cause 
and not due to willful neglect, and 
‘‘(iii)(I) the corporation disposes of the assets set 
forth on the schedule specified in clause (i) within 
6 months after the last day of the quarter in which 
the corporation’s identification of the failure to satisfy 
the requirements of such subsection occurred or such 
other time period prescribed by the Secretary and in 
the manner prescribed by the Secretary, or 
‘‘(II) the requirements of such subsection are other-
wise met within the time period specified in subclause 
(I). 
‘‘(B) RULE FOR CERTAIN DE MINIMIS FAILURES.—A cor-
poration that fails to meet the requirements of subsection 
(b)(3) for such quarter shall nevertheless be considered 
to have satisfied the requirements of such subsection for 
such quarter if— 
Deadline. 
26 USC 851. 
Applicability. 
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124 STAT. 3540 
PUBLIC LAW 111–325—DEC. 22, 2010 
‘‘(i) such failure is due to the ownership of assets 
the total value of which does not exceed the lesser 
of— 
‘‘(I) 1 percent of the total value of the corpora-
tion’s assets at the end of the quarter for which 
such measurement is done, or 
‘‘(II) $10,000,000, and 
‘‘(ii)(I) the corporation, following the identification 
of such failure, disposes of assets in order to meet 
the requirements of such subsection within 6 months 
after the last day of the quarter in which the corpora-
tion’s identification of the failure to satisfy the require-
ments of such subsection occurred or such other time 
period prescribed by the Secretary and in the manner 
prescribed by the Secretary, or 
‘‘(II) the requirements of such subsection are other-
wise met within the time period specified in subclause 
(I). 
‘‘(C) TAX.— 
‘‘(i) TAX IMPOSED.—If subparagraph (A) applies to 
a corporation for any quarter, there is hereby imposed 
on such corporation a tax in an amount equal to the 
greater of— 
‘‘(I) $50,000, or 
‘‘(II) the amount determined (pursuant to regu-
lations promulgated by the Secretary) by multi-
plying the net income generated by the assets 
described in the schedule specified in subpara-
graph (A)(i) for the period specified in clause (ii) 
by the highest rate of tax specified in section 11. 
‘‘(ii) PERIOD.—For purposes of clause (i)(II), the 
period described in this clause is the period beginning 
on the first date that the failure to satisfy the require-
ments of subsection (b)(3) occurs as a result of the 
ownership of such assets and ending on the earlier 
of the date on which the corporation disposes of such 
assets or the end of the first quarter when there is 
no longer a failure to satisfy such subsection. 
‘‘(iii) ADMINISTRATIVE
PROVISIONS.—For purposes 
of subtitle F, a tax imposed by this subparagraph shall 
be treated as an excise tax with respect to which 
the deficiency procedures of such subtitle apply.’’. 
(b) GROSS INCOME TEST.—Section 851 is amended by adding 
at the end the following new subsection: 
‘‘(i) FAILURE TO SATISFY GROSS INCOME TEST.— 
‘‘(1) DISCLOSURE REQUIREMENT.—A corporation that fails 
to meet the requirement of paragraph (2) of subsection (b) 
for any taxable year shall nevertheless be considered to have 
satisfied the requirement of such paragraph for such taxable 
year if— 
‘‘(A) following the corporation’s identification of the 
failure to meet such requirement for such taxable year, 
a description of each item of its gross income described 
in such paragraph is set forth in a schedule for such 
taxable year filed in the manner provided by the Secretary, 
and 
26 USC 851. 
Deadline. 
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124 STAT. 3541 
PUBLIC LAW 111–325—DEC. 22, 2010 
‘‘(B) the failure to meet such requirement is due to 
reasonable cause and not due to willful neglect. 
‘‘(2) IMPOSITION
OF
TAX
ON
FAILURES.—If paragraph (1) 
applies to a regulated investment company for any taxable 
year, there is hereby imposed on such company a tax in an 
amount equal to the excess of— 
‘‘(A) the gross income of such company which is not 
derived from sources referred to in subsection (b)(2), over 
‘‘(B) 1⁄9 of the gross income of such company which 
is derived from such sources.’’. 
(c) DEDUCTION OF TAXES PAID FROM INVESTMENT COMPANY 
TAXABLE INCOME.—Paragraph (2) of section 852(b) is amended by 
adding at the end the following new subparagraph: 
‘‘(G) There shall be deducted an amount equal to the 
tax imposed by subsections (d)(2) and (i) of section 851 
for the taxable year.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years with respect to which the due date 
(determined with regard to any extensions) of the return of tax 
for such taxable year is after the date of the enactment of this 
Act. 
TITLE III—MODIFICATION OF RULES 
RELATED TO DIVIDENDS AND OTHER 
DISTRIBUTIONS 
SEC. 301. MODIFICATION OF DIVIDEND DESIGNATION REQUIREMENTS 
AND ALLOCATION RULES FOR REGULATED INVESTMENT 
COMPANIES. 
(a) CAPITAL GAIN DIVIDENDS.— 
(1) IN
GENERAL.—Subparagraph (C) of section 852(b)(3) 
is amended to read as follows: 
‘‘(C) DEFINITION OF CAPITAL GAIN DIVIDEND.—For pur-
poses of this part— 
‘‘(i) IN
GENERAL.—Except as provided in clause 
(ii), a capital gain dividend is any dividend, or part 
thereof, which is reported 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 com-
pany for such taxable year, a capital gain dividend 
is the excess of— 
‘‘(I) the reported capital gain dividend amount, 
over 
‘‘(II) the excess reported amount which is allo-
cable to such reported capital gain dividend 
amount. 
‘‘(iii) ALLOCATION OF EXCESS REPORTED AMOUNT.— 
‘‘(I) IN GENERAL.—Except as provided in sub-
clause (II), the excess reported amount (if any) 
which is allocable to the reported capital gain divi-
dend amount is that portion of the excess reported 
amount which bears the same ratio to the excess 
26 USC 851 note. 
26 USC 852. 
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124 STAT. 3542 
PUBLIC LAW 111–325—DEC. 22, 2010 
reported amount as the reported capital gain divi-
dend amount bears to the aggregate reported 
amount. 
‘‘(II) SPECIAL
RULE
FOR
NONCALENDAR
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 reported amount for such tax-
able 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 dividend paid 
on or before December 31 of such taxable year. 
‘‘(iv) DEFINITIONS.—For purposes of this subpara-
graph— 
‘‘(I) 
REPORTED
CAPITAL
GAIN
DIVIDEND 
AMOUNT.—The term ‘reported capital gain dividend 
amount’ means the amount reported to its share-
holders under clause (i) as a capital gain dividend. 
‘‘(II) EXCESS
REPORTED
AMOUNT.—The term 
‘excess reported amount’ means the excess of the 
aggregate reported amount over the net capital 
gain of the company for the taxable year. 
‘‘(III) AGGREGATE
REPORTED
AMOUNT.—The 
term ‘aggregate reported amount’ means the aggre-
gate amount of dividends reported by the company 
under clause (i) as capital gain dividends for the 
taxable year (including capital gain dividends paid 
after the close of the taxable year described in 
section 855). 
‘‘(IV) POST-DECEMBER
REPORTED
AMOUNT.— 
The term ‘post-December reported amount’ means 
the aggregate reported amount determined by 
taking into account only dividends paid after 
December 31 of the taxable year. 
‘‘(v) ADJUSTMENT FOR DETERMINATIONS.—If there 
is an increase in the excess described in subparagraph 
(A) for the taxable year which results from a deter-
mination (as defined in section 860(e)), the company 
may, subject to the limitations of this subparagraph, 
increase the amount of capital gain dividends reported 
under clause (i). 
‘‘(vi) SPECIAL RULE FOR LOSSES LATE IN THE CAL-
ENDAR YEAR.—For special rule for certain losses after 
October 31, see paragraph (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 regulated investment company and reported by 
the company as an exempt-interest dividend in written 
statements furnished to its shareholders. 
26 USC 860. 
Applicability. 
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124 STAT. 3543 
PUBLIC LAW 111–325—DEC. 22, 2010 
‘‘(ii) EXCESS REPORTED AMOUNTS.—If the aggregate 
reported amount with respect to the company for any 
taxable year exceeds the exempt interest of the com-
pany for such taxable year, an exempt-interest divi-
dend is the excess of— 
‘‘(I) the reported exempt-interest dividend 
amount, over 
‘‘(II) the excess reported amount which is allo-
cable to such reported exempt-interest dividend 
amount. 
‘‘(iii) ALLOCATION OF EXCESS REPORTED AMOUNT.— 
‘‘(I) IN GENERAL.—Except as provided in sub-
clause (II), the excess reported amount (if any) 
which is allocable 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. 
‘‘(II) SPECIAL
RULE
FOR
NONCALENDAR
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 reported amount for such tax-
able 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 dividend paid 
on or before December 31 of such taxable year. 
‘‘(iv) DEFINITIONS.—For purposes of this subpara-
graph— 
‘‘(I) REPORTED
EXEMPT-INTEREST
DIVIDEND 
AMOUNT.—The term ‘reported exempt-interest divi-
dend amount’ means the amount reported to its 
shareholders under clause (i) as an exempt-interest 
dividend. 
‘‘(II) EXCESS
REPORTED
AMOUNT.—The term 
‘excess reported amount’ means the excess of the 
aggregate reported amount over the exempt 
interest of the company for the taxable year. 
‘‘(III) AGGREGATE
REPORTED
AMOUNT.—The 
term ‘aggregate reported amount’ means the aggre-
gate amount of dividends reported by the company 
under clause (i) as exempt-interest dividends for 
the taxable year (including exempt-interest divi-
dends paid after the close of the taxable year 
described in section 855). 
‘‘(IV) POST-DECEMBER
REPORTED
AMOUNT.— 
The term ‘post-December reported 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 respect to any regulated 
investment company, the excess of the amount 
of interest excludable from gross income under 
Applicability. 
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124 STAT. 3544 
PUBLIC LAW 111–325—DEC. 22, 2010 
section 103(a) over the amounts disallowed 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 company in a 
written notice mailed to its shareholders not later than 
60 days after the close of the taxable year’’ and inserting 
‘‘so reported by the company in a written statement fur-
nished 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 shareholders required 
by subsection (c)’’ in the text thereof, and 
(B) by striking ‘‘AND NOTIFYING SHAREHOLDERS’’ 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 regulated invest-
ment company in a written notice mailed to its share-
holders not later than 60 days after the close of its taxable 
year’’ and inserting ‘‘so reported by the regulated invest-
ment 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 
853A is amended— 
(A) by striking ‘‘and the notice to shareholders required 
by subsection (c)’’ in the text thereof, and 
(B) by striking ‘‘AND NOTIFYING SHAREHOLDERS’’ 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 subparagraph 
by the regulated investment company’’ in subparagraph 
(A) and inserting ‘‘reported by the regulated investment 
company as eligible for such deduction in written state-
ments furnished to its shareholders’’, 
(B) by striking ‘‘designated by the regulated investment 
company’’ in subparagraph (B)(i) and inserting ‘‘reported 
by the regulated investment company as qualified dividend 
income in written statements furnished to its share-
holders’’, 
(C) by striking ‘‘designated’’ in subparagraph (C)(i) and 
inserting ‘‘reported’’, and 
(D) by striking ‘‘designated’’ in subparagraph (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 PERSONS.— 
26 USC 853. 
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124 STAT. 3545 
PUBLIC LAW 111–325—DEC. 22, 2010 
(1) INTEREST-RELATED
DIVIDENDS.—Subparagraph (C) of 
section 871(k)(1) is amended by striking all that precedes ‘‘any 
taxable year of the company beginning’’ and inserting the fol-
lowing: 
‘‘(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 related dividend in written statements fur-
nished to its shareholders. 
‘‘(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 company for such taxable year, an interest 
related dividend is the excess of— 
‘‘(I) the reported interest related dividend 
amount, over 
‘‘(II) the excess reported amount which is allo-
cable to such reported interest related dividend 
amount. 
‘‘(iii) ALLOCATION OF EXCESS REPORTED AMOUNT.— 
‘‘(I) IN GENERAL.—Except as provided in sub-
clause (II), the excess reported amount (if any) 
which is allocable 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
NONCALENDAR
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 reported amount for such tax-
able 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 dividend paid 
on or before December 31 of such taxable year. 
‘‘(iv) DEFINITIONS.—For purposes of this subpara-
graph— 
‘‘(I) REPORTED
INTEREST
RELATED
DIVIDEND 
AMOUNT.—The term ‘reported interest related divi-
dend 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 
aggregate reported amount over the qualified net 
interest income of the company for the taxable 
year. 
‘‘(III) AGGREGATE
REPORTED
AMOUNT.—The 
term ‘aggregate reported amount’ means the aggre-
gate amount of dividends reported by the company 
under clause (i) as interest related dividends for 
Applicability. 
26 USC 871. 
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124 STAT. 3546 
PUBLIC LAW 111–325—DEC. 22, 2010 
the taxable year (including interest related divi-
dends paid after the close of the taxable year 
described in section 855). 
‘‘(IV) POST-DECEMBER
REPORTED
AMOUNT.— 
The term ‘post-December reported 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 divi-
dend’ shall not include any dividend 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: 
‘‘(C) SHORT-TERM
CAPITAL
GAIN
DIVIDEND.—For pur-
poses 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 shareholders. 
‘‘(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 company for such taxable year, the term ‘short- 
term capital gain dividend’ means the excess of— 
‘‘(I) the reported short-term capital gain divi-
dend amount, over 
‘‘(II) the excess reported amount which is allo-
cable to such reported short-term capital gain divi-
dend amount. 
‘‘(iii) ALLOCATION OF EXCESS REPORTED AMOUNT.— 
‘‘(I) IN GENERAL.—Except as provided in sub-
clause (II), the excess reported amount (if any) 
which is allocable to the reported short-term cap-
ital gain dividend amount is that portion of the 
excess reported amount which bears the same ratio 
to the excess reported amount as the reported 
short-term capital gain dividend amount bears to 
the aggregate reported amount. 
‘‘(II) SPECIAL
RULE
FOR
NONCALENDAR
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 reported amount for such tax-
able 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 dividend paid 
on or before December 31 of such taxable year. 
‘‘(iv) DEFINITIONS.—For purposes of this subpara-
graph— 
‘‘(I) REPORTED SHORT-TERM CAPITAL GAIN DIVI-
DEND
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. 
Applicability. 
Definitions. 
26 USC 871. 
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124 STAT. 3547 
PUBLIC LAW 111–325—DEC. 22, 2010 
‘‘(II) EXCESS
REPORTED
AMOUNT.—The term 
‘excess reported amount’ means the excess of the 
aggregate reported amount over the qualified 
short-term gain of the company for the taxable 
year. 
‘‘(III) AGGREGATE
REPORTED
AMOUNT.—The 
term ‘aggregate reported amount’ means the aggre-
gate amount of dividends reported by the company 
under clause (i) as short-term capital gain divi-
dends 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
REPORTED
AMOUNT.— 
The term ‘post-December reported 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 include 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 enact-
ment 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 subparagraphs (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 INVESTMENT 
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 determining 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 accumulated earnings and profits) shall 
not be reduced by any amount which is not allowable 
as a deduction (other than by reason of section 265 
or 171(a)(2)) in computing its taxable income for such 
taxable year. 
26 USC 854 note. 
26 USC 852 note. 
26 USC 855. 
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124 STAT. 3548 
PUBLIC LAW 111–325—DEC. 22, 2010 
‘‘(ii) COORDINATION WITH TREATMENT OF NET CAP-
ITAL 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 investment 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 enact-
ment of this Act. 
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 exempt-interest 
dividends to its shareholders without regard to whether 
such fund satisfies the requirements of the first sentence 
of subsection (b)(5), and 
‘‘(B) such fund may elect the application of section 
853 (relating to foreign tax credit allowed to shareholders) 
without regard to the requirement of subsection (a)(1) 
thereof. 
‘‘(2) QUALIFIED FUND OF FUNDS.—For purposes of this sub-
section, 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 
companies.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after the date of the enact-
ment of this Act. 
SEC. 304. MODIFICATION OF RULES FOR SPILLOVER DIVIDENDS OF 
REGULATED INVESTMENT COMPANIES. 
(a) DEADLINE FOR DECLARATION OF DIVIDEND.—Paragraph (1) 
of section 855(a) is amended to read as follows: 
‘‘(1) declares a dividend before the later of— 
‘‘(A) the 15th day of the 9th month following 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’’. 
26 USC 852 note. 
26 USC 852 note. 
26 USC 852. 
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124 STAT. 3549 
PUBLIC LAW 111–325—DEC. 22, 2010 
(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 shall be treated as the same type of dividend 
as a capital gain dividend.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions in taxable years beginning after the 
date of the enactment of this Act. 
SEC. 305. RETURN OF CAPITAL DISTRIBUTIONS OF REGULATED 
INVESTMENT COMPANIES. 
(a) IN GENERAL.—Subsection (b) of section 316 is amended 
by adding at the end the following new paragraph: 
‘‘(4) CERTAIN
DISTRIBUTIONS
BY
REGULATED
INVESTMENT 
COMPANIES IN EXCESS OF EARNINGS AND PROFITS.—In the case 
of a regulated investment company that has a taxable year 
other than a calendar year, if the distributions by the company 
with respect to any class of stock of such company for the 
taxable year exceed the company’s current and accumulated 
earnings and profits which may be used for the payment of 
dividends on such class of stock, the company’s current earnings 
and profits shall, for purposes of subsection (a), be allocated 
first to distributions with respect to such class of stock made 
during the portion of the taxable year which precedes January 
1.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to distributions made in taxable years beginning after 
the date of the enactment of this Act. 
SEC. 306. DISTRIBUTIONS IN REDEMPTION OF STOCK OF A REGULATED 
INVESTMENT COMPANY. 
(a) REDEMPTIONS TREATED AS EXCHANGES.— 
(1) IN GENERAL.—Subsection (b) of section 302 is amended 
by redesignating paragraph (5) as paragraph (6) and by 
inserting after paragraph (4) the following new paragraph: 
‘‘(5) REDEMPTIONS
BY
CERTAIN
REGULATED
INVESTMENT 
COMPANIES.—Except to the extent provided in regulations pre-
scribed by the Secretary, subsection (a) shall apply to any 
distribution in redemption of stock of a publicly offered regu-
lated investment company (within the meaning of section 
67(c)(2)(B)) if— 
‘‘(A) such redemption is upon the demand of the stock-
holder, and 
‘‘(B) such company issues only stock which is redeem-
able upon the demand of the stockholder.’’. 
(2) CONFORMING
AMENDMENT.—Subsection (a) of section 
302 is amended by striking ‘‘or (4)’’ and inserting ‘‘(4), or (5)’’. 
(b) LOSSES ON REDEMPTIONS NOT DISALLOWED FOR FUND-OF- 
FUNDS REGULATED INVESTMENT COMPANIES.—Paragraph (3) of sec-
tion 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— 
26 USC 267 note. 
26 USC 316 note. 
26 USC 855 note. 
26 USC 855. 
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124 STAT. 3550 
PUBLIC LAW 111–325—DEC. 22, 2010 
‘‘(i) such company issues only stock which is 
redeemable upon the demand of the stockholder, and 
‘‘(ii) such redemption is upon the demand of 
another regulated investment company.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions after the date of the enactment of 
this Act. 
SEC. 307. REPEAL OF PREFERENTIAL DIVIDEND RULE FOR PUBLICLY 
OFFERED REGULATED INVESTMENT COMPANIES. 
(a) IN GENERAL.—Subsection (c) of section 562 is amended 
by striking ‘‘The amount’’ and inserting ‘‘Except in the case of 
a publicly offered regulated investment company (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 regulated investment com-
pany (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 beginning after the 
date of the enactment of this Act. 
SEC. 308. ELECTIVE DEFERRAL OF CERTAIN LATE-YEAR LOSSES OF 
REGULATED INVESTMENT COMPANIES. 
(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 investment 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. 
‘‘(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-October 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 attributable 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 defined in section 
4982(e)(5)(B)(ii)) attributable to the portion of the 
taxable year after October 31, plus 
‘‘(II) the ordinary losses not described in sub-
clause (I) attributable to the portion of the taxable 
year after December 31, over 
‘‘(ii) the sum of— 
26 USC 562 note. 
26 USC 267 note. 
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124 STAT. 3551 
PUBLIC LAW 111–325—DEC. 22, 2010 
‘‘(I) the specified gains (as defined in section 
4982(e)(5)(B)(i)) attributable to the portion of the 
taxable year after October 31, plus 
‘‘(II) the ordinary income not described in sub-
clause (I) attributable to the portion of the taxable 
year after December 31. 
‘‘(E) SPECIAL
RULE
FOR
COMPANIES
DETERMINING 
REQUIRED CAPITAL GAIN DISTRIBUTIONS 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 subparagraphs 
(C), (D)(i)(I), and (D)(ii)(I), and 
‘‘(ii) if such company’s taxable year ends with the 
month of December, subparagraph (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 following: ‘‘For purposes 
of applying this chapter to distributions made by a regulated 
investment company with respect to any calendar year, the 
earnings and profits of such company shall be determined with-
out 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 defined in subsection (b)(8)(D)).’’ 
(3) Subparagraph (D) of section 871(k)(2) is amended by 
striking the last two sentences and inserting the following: 
‘‘For purposes of this subparagraph, 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.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after the date of the enact-
ment of this Act. 
SEC. 309. EXCEPTION TO HOLDING PERIOD REQUIREMENT FOR CER-
TAIN REGULARLY DECLARED EXEMPT-INTEREST DIVI-
DENDS. 
(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 REQUIREMENT FOR 
CERTAIN
REGULARLY
DECLARED
EXEMPT-INTEREST
DIVI-
DENDS.— 
‘‘(i) DAILY DIVIDEND COMPANIES.—Except as other-
wise provided by regulations, subparagraph (B) shall 
not apply with respect to a regular dividend paid by 
a regulated investment company which declares 
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. 
26 USC 852 note. 
26 USC 852. 
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124 STAT. 3552 
PUBLIC LAW 111–325—DEC. 22, 2010 
‘‘(ii) AUTHORITY TO SHORTEN REQUIRED 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 
RELATED 
TO EXCISE TAX APPLICABLE TO REG-
ULATED INVESTMENT COMPANIES 
SEC. 401. EXCISE TAX EXEMPTION FOR CERTAIN REGULATED INVEST-
MENT 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 paragraph (2), 
and 
(4) by inserting after paragraph (2) the following new para-
graphs: 
‘‘(3) any other tax-exempt entity whose ownership of bene-
ficial interests in the company would not preclude the applica-
tion of section 817(h)(4), or 
‘‘(4) another regulated investment company described in 
this subsection.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to calendar years beginning after the date of the enact-
ment 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 currency gain attributable 
to a section 988 transaction (within the meaning of 
26 USC 4982 
note. 
26 USC 852 note. 
26 USC 852. 
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124 STAT. 3553 
PUBLIC LAW 111–325—DEC. 22, 2010 
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 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 paragraph (4), subparagraph (A) shall 
be applied by substituting the last day of the company’s 
taxable year for October 31. 
‘‘(6) TREATMENT OF MARK TO MARKET GAIN.— 
‘‘(A) IN GENERAL.—For purposes of determining a regu-
lated investment company’s ordinary income, notwith-
standing 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 com-
pany’s taxable year for October 31. 
‘‘(B) SPECIFIED MARK TO MARKET PROVISION.—For pur-
poses of this paragraph, the term ‘specified mark to market 
provision’ means sections 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 ORDINARY LOSSES.— 
Except as provided in regulations prescribed by the Secretary, 
in the case of a regulated 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 without 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 fol-
lowing calendar year.’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to calendar years beginning after the date of the enact-
ment of this Act. 
SEC. 403. DISTRIBUTED AMOUNT FOR EXCISE TAX PURPOSES DETER-
MINED ON BASIS OF TAXES PAID BY REGULATED INVEST-
MENT 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 PAYMENTS.— 
26 USC 4982. 
26 USC 4982 
note. 
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124 STAT. 3554 
PUBLIC LAW 111–325—DEC. 22, 2010 
‘‘(A) IN GENERAL.—In the case of a regulated invest-
ment company which elects the application of this para-
graph for any calendar year— 
‘‘(i) the distributed amount with respect to such 
company for such calendar year shall be increased 
by the amount on which qualified estimated tax pay-
ments are made by such company during such calendar 
year, and 
‘‘(ii) the distributed amount with respect to such 
company for the following calendar year shall be 
reduced by the amount of such increase. 
‘‘(B) QUALIFIED ESTIMATED TAX PAYMENTS.—For pur-
poses of this paragraph, the term ‘qualified estimated tax 
payments’ means, with respect to any calendar year, pay-
ments 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 enact-
ment of this Act. 
SEC. 404. INCREASE IN REQUIRED DISTRIBUTION OF CAPITAL GAIN 
NET INCOME. 
(a) IN GENERAL.—Subparagraph (B) of section 4982(b)(1) is 
amended by striking ‘‘98 percent’’ and inserting ‘‘98.2 percent’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to calendar years beginning after the date of the enact-
ment of this Act. 
TITLE V—OTHER PROVISIONS 
SEC. 501. REPEAL OF ASSESSABLE PENALTY WITH RESPECT TO 
LIABILITY FOR TAX OF REGULATED INVESTMENT COMPA-
NIES. 
(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 enact-
ment of this Act. 
SEC. 502. MODIFICATION OF SALES LOAD BASIS DEFERRAL RULE FOR 
REGULATED INVESTMENT COMPANIES. 
(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 disposition,’’. 
26 USC 860 note. 
26 USC 4982 
note. 
26 USC 4982. 
26 USC 4982 
note. 
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124 STAT. 3555 
PUBLIC LAW 111–325—DEC. 22, 2010 
LEGISLATIVE HISTORY—H.R. 4337: 
CONGRESSIONAL RECORD, Vol. 156 (2010): 
Sept. 28, considered and passed House. 
Dec. 8, considered and passed Senate, amended. 
Dec. 15, House concurred in Senate amendment. 
(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. 
Approved December 22, 2010. 
26 USC 852 note. 
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