PUBL325.PS

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) S

HORT

ITLE

.—This Act may be cited as the ‘‘Regulated

Investment Company Modernization Act of 2010’’.

(b) R

EFERENCE

.—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.

ABLE OF

ONTENTS

.—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) I

ENERAL

.—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) R

EGULATED INVESTMENT COMPANIES

.—

‘‘(A) I

N 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) C

OORDINATION 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) L

OSSES 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) L

OSSES 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) C

ONFORMING

MENDMENTS

.—

(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)’’.

FFECTIVE

ATE

.—

(1) I

N 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) C

OORDINATION 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) A

SSET

EST

.—Subsection (d) of section 851 is amended—

(1) by striking ‘‘A corporation which meets’’ and inserting

the following:

‘‘(1) I

N GENERAL

.—A corporation which meets’’, and

(2) by adding at the end the following new paragraph:

‘‘(2) S

PECIAL 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) I

N 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) R

ULE 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) T

.—

‘‘(i) T

AX 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) P

ERIOD

.—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) A

DMINISTRATIVE 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) G

ROSS

NCOME

EST

.—Section 851 is amended by adding

at the end the following new subsection:

‘‘(i) F

AILURE

ATISFY

ROSS

NCOME

EST

.—

‘‘(1) D

ISCLOSURE 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) I

MPOSITION 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)

⁄

of the gross income of such company which

is derived from such sources.’’.

EDUCTION OF

AXES

AID

ROM

NVESTMENT

OMPANY

AXABLE

NCOME

.—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) E

FFECTIVE

ATE

.—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) C

APITAL

AIN

IVIDENDS

.—

(1) I

N GENERAL

.—Subparagraph (C) of section 852(b)(3)

is amended to read as follows:

‘‘(C) D

EFINITION OF CAPITAL GAIN DIVIDEND

.—For pur-

poses of this part—

‘‘(i) I

N 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) E

XCESS 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) A

LLOCATION OF EXCESS REPORTED AMOUNT

.—

‘‘(I) I

N 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) S

PECIAL 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) D

EFINITIONS

.—For purposes of this subpara-

graph—

‘‘(I) R

EPORTED 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) E

XCESS 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) A

GGREGATE 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) P

OST

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) A

DJUSTMENT 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) S

PECIAL RULE FOR LOSSES LATE IN THE CAL

ENDAR YEAR

.—For special rule for certain losses after

October 31, see paragraph (8).’’.

(2) C

ONFORMING AMENDMENT

.—Subparagraph (B) of section

860(f)(2) is amended by inserting ‘‘or reported (as the case

may be)’’ after ‘‘designated’’.

(b) E

XEMPT

-I

NTEREST

IVIDENDS

.—Subparagraph (A) of section

852(b)(5) is amended to read as follows:

‘‘(A) D

EFINITION OF EXEMPT

INTEREST DIVIDEND

.—

‘‘(i) I

N 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) E

XCESS 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) A

LLOCATION OF EXCESS REPORTED AMOUNT

.—

‘‘(I) I

N 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) S

PECIAL 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) D

EFINITIONS

.—For purposes of this subpara-

graph—

‘‘(I) R

EPORTED 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) E

XCESS 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) A

GGREGATE 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) P

OST

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) E

XEMPT 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).’’.

OREIGN

REDITS

.—

(1) I

N 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 ‘‘N

OTICE

’’ in the heading and inserting

‘‘S

TATEMENTS

’’.

(2) C

ONFORMING 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

OTIFYING

HAREHOLDERS

’’ in

the heading thereof.

(d) C

REDITS FOR

REDIT

ONDS

.—

(1) I

N 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 ‘‘N

OTICE

’’ in the heading and inserting

‘‘S

TATEMENTS

’’.

(2) C

ONFORMING 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

OTIFYING

HAREHOLDERS

’’ in

the heading thereof.

(e) D

IVIDEND

ECEIVED

EDUCTION

ETC

.—

(1) I

N 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’’,

inserting ‘‘reported’’, and

(D) by striking ‘‘designated’’ in subparagraph (C)(ii)

and inserting ‘‘reported’’.

(2) C

ONFORMING 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) D

IVIDENDS

AID TO

ERTAIN

OREIGN

ERSONS

.—

26 USC 853.

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124 STAT. 3545 PUBLIC LAW 111–325—DEC. 22, 2010

(1) I

NTEREST

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) I

NTEREST

RELATED DIVIDEND

.—For purposes of

this paragraph—

‘‘(i) I

N 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) E

XCESS 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) A

LLOCATION OF EXCESS REPORTED AMOUNT

.—

‘‘(I) I

N 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) S

PECIAL 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) D

EFINITIONS

.—For purposes of this subpara-

graph—

‘‘(I) R

EPORTED 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) E

XCESS 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) A

GGREGATE 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) P

OST

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) T

ERMINATION

.—The term ‘interest related divi-

dend’ shall not include any dividend with respect to’’.

(2) S

HORT

TERM CAPITAL GAIN DIVIDENDS

.—Subparagraph

‘‘any taxable year of the company beginning’’ and inserting

the following:

‘‘(C) S

HORT

TERM CAPITAL GAIN DIVIDEND

.—For pur-

poses of this paragraph—

‘‘(i) I

N 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) E

XCESS 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) A

LLOCATION OF EXCESS REPORTED AMOUNT

.—

‘‘(I) I

N 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) S

PECIAL 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) D

EFINITIONS

.—For purposes of this subpara-

graph—

‘‘(I) R

EPORTED 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) E

XCESS 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) A

GGREGATE 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) P

OST

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) T

ERMINATION

.—The term ‘short-term capital

gain dividend’ shall not include any dividend with

respect to’’.

(g) C

ONFORMING

MENDMENTS

.—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) E

FFECTIVE

ATE

.—The amendments made by this section

shall apply to taxable years beginning after the date of the enact-

ment of this Act.

(i) A

PPLICATION OF

JGTRRA S

UNSET

.—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) I

ENERAL

.—Paragraph (1) of section 852(c) is amended

to read as follows:

‘‘(1) T

REATMENT OF NONDEDUCTIBLE ITEMS

.—

‘‘(A) N

ET 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) O

THER NONDEDUCTIBLE ITEMS

.—

‘‘(i) I

N 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) C

OORDINATION WITH TREATMENT OF NET CAP

ITAL LOSSES

.—Clause (i) shall not apply to a net capital

loss to which subparagraph (A) applies.’’.

(b) C

ONFORMING

MENDMENTS

.—

(1) Subsection (c) of section 852 is amended by adding

at the end the following new paragraph:

‘‘(4) R

EGULATED 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.

FFECTIVE

ATE

.—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) I

ENERAL

.—Section 852 is amended by adding at the

end the following new subsection:

‘‘(g) S

PECIAL

ULES FOR

UND OF

UNDS

.—

‘‘(1) I

N 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) Q

UALIFIED 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) E

FFECTIVE

ATE

.—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) D

EADLINE FOR

ECLARATION OF

IVIDEND

.—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) D

EADLINE FOR

ISTRIBUTION OF

IVIDEND

.—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.

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124 STAT. 3549 PUBLIC LAW 111–325—DEC. 22, 2010

HORT

TERM

APITAL

AIN

.—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) E

FFECTIVE

ATE

.—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) I

ENERAL

.—Subsection (b) of section 316 is amended

by adding at the end the following new paragraph:

‘‘(4) C

ERTAIN 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) E

FFECTIVE

ATE

.—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) R

EDEMPTIONS

REATED AS

XCHANGES

.—

(1) I

N 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) R

EDEMPTIONS 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) C

ONFORMING AMENDMENT

.—Subsection (a) of section

302 is amended by striking ‘‘or (4)’’ and inserting ‘‘(4), or (5)’’.

(b) L

OSSES ON

EDEMPTIONS

ISALLOWED FOR

UND

FUNDS

EGULATED

NVESTMENT

OMPANIES

.—Paragraph (3) of sec-

tion 267(f) is amended by adding at the end the following new

subparagraph:

‘‘(D) R

EDEMPTIONS BY FUND

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.’’.

FFECTIVE

ATE

.—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) I

ENERAL

.—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) C

ONFORMING

MENDMENT

.—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.

FFECTIVE

ATE

.—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) I

ENERAL

.—Paragraph (8) of section 852(b) is amended

to read as follows:

‘‘(8) E

LECTIVE DEFERRAL OF CERTAIN LATE

YEAR LOSSES

.—

‘‘(A) I

N 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) Q

UALIFIED 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) P

OST

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) L

ATE

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) S

PECIAL 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) C

ONFORMING

MENDMENTS

.—

(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.’’.

FFECTIVE

ATE

.—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) I

ENERAL

.—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) E

XCEPTION TO HOLDING PERIOD REQUIREMENT FOR

CERTAIN REGULARLY DECLARED EXEMPT

INTEREST DIVI

DENDS

.—

‘‘(i) D

AILY 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) A

UTHORITY TO SHORTEN REQUIRED HOLDING

PERIOD WITH RESPECT TO OTHER COMPANIES

.—’’.

(b) C

ONFORMING

MENDMENT

.—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’’.

FFECTIVE

ATE

.—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) I

ENERAL

.—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) E

FFECTIVE

ATE

.—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) I

ENERAL

.—Subsection (e) of section 4982 is amended

by striking paragraphs (5) and (6) and inserting the following

new paragraphs:

‘‘(5) T

REATMENT OF SPECIFIED GAINS AND LOSSES AFTER

OCTOBER 31 OF CALENDAR YEAR

.—

‘‘(A) I

N 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) S

PECIFIED GAINS AND LOSSES

.—For purposes of

this paragraph—

‘‘(i) S

PECIFIED 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) S

PECIFIED 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) S

PECIAL 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) T

REATMENT OF MARK TO MARKET GAIN

.—

‘‘(A) I

N 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) S

PECIFIED 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) E

LECTIVE 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) E

FFECTIVE

ATE

.—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) I

ENERAL

.—Subsection (c) of section 4982 is amended

by adding at the end the following new paragraph:

‘‘(4) S

PECIAL 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) I

N 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) Q

UALIFIED 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) E

FFECTIVE

ATE

.—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) I

ENERAL

.—Subparagraph (B) of section 4982(b)(1) is

amended by striking ‘‘98 percent’’ and inserting ‘‘98.2 percent’’.

(b) E

FFECTIVE

ATE

.—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) I

ENERAL

.—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) C

ONFORMING

MENDMENT

.—Section 860 is amended by

striking subsection (j).

FFECTIVE

ATE

.—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) I

ENERAL

.—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) E

FFECTIVE

ATE

.—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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