Excise tax on undistributed income of regulated investment companies

There is hereby imposed a tax on every regulated investment company for each calendar year equal to 4 percent of the excess (if any) of— For purposes of this section— The term “required distribution” means, with respect to any calendar year, the sum of— The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of— The grossed up required distribution for any calendar year is the required distribution for such year determined— For purposes of this section— The term “distributed amount” means, with respect to any calendar year, the sum of— The amount determined under paragraph (1) for any calendar year shall be increased by the excess (if any) of— The amount of the dividends paid during any calendar year shall be determined without regard to— In the case of a regulated investment company which elects the application of this paragraph for any calendar year— For purposes of this paragraph, the term “qualified estimated tax payments” means, with respect to any calendar year, payments 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. The tax imposed by this section for any calendar year shall be paid on or before March 15 of the following calendar year. For purposes of this section— The term “ordinary income” means the investment company taxable income (as defined in section 852(b)(2)) determined— Except as provided in subparagraph (B), the term “capital gain net income” has the meaning given such term by section 1222(9) (determined by treating the 1-year period ending on October 31 of any calendar year as the company’s taxable year). The amount determined under subparagraph (A) shall be reduced (but not below the net capital gain) by the amount of the company’s net ordinary loss for the calendar year. For purposes of this paragraph— The term “net capital gain” has the meaning given such term by section 1222(11) (determined by treating the 1-year period ending on October 31 of the calendar year as the company’s taxable year). The net ordinary loss for the calendar year is the amount which would be the net operating loss of the company for the calendar year if the amount of such loss were determined in the same manner as ordinary income is determined under paragraph (1). In the case of any deficiency dividend (as defined in section 860(f))— If— An election under this paragraph, once made, may be revoked only with the consent of the Secretary. 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. For purposes of this paragraph— 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 section 988) and any amount includible in gross income under section 1296(a)(1). 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). 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. For purposes of determining a regulated investment company’s ordinary income, notwithstanding paragraph (1)(C), each specified mark to market provision shall be applied as if such company’s taxable year ended on October 31. In the case of a company making an election under paragraph (4), the preceding sentence shall be applied by substituting the last day of the company’s taxable year for October 31. For purposes 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 or which determines income by reference to the value of an item on the last day of the taxable year. 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— This section shall not apply to any regulated investment company for any calendar year if at all times during such calendar year each shareholder in such company was—