IRS issues notice on capital gain distributions from a RIC

Tax Hot TopicsThe IRS on May 29 released Notice 2015-41, which provides guidance on the proper reporting and treatment of capital gain dividends from regulated investment companies (RICs).  

The notice was issued to update prior guidance (Notice 97-64) based on statutory changes to Section 852 made according to the Regulated Investment Company Modernization Act of 2010 and solely addresses RICs. The notice doesn’t address real estate investment trusts.

The updated guidance for capital gain dividends includes changes to the reporting and designation of capital gain rate groups,  shareholder treatment,  limitations on designation of capital gain dividends, deferral under Section 852(b)(8) for post-Oct. 31 capital losses, and the bifurcation adjustment described in Notice 97-64.

Andy Cordonnier
+1 202 521 1502

Greg Fairbanks
+1 202 521 1503

Tax professional standards statement
This document supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the subject of this document, we encourage you to contact us or an independent tax professional to discuss the potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this document may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this document is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.