Tax News

CCH (cch.taxgroup.com) reports:

  The IRS has released temporary guidance regarding stock distributions by publicly traded regulated investment companies (RICs). Previously issued guidance in Rev. Proc. 2008-68, I.R.B. 2008-52, 1373, applied only to distributions by publicly traded real estate investment trusts (REITs).

  A stock distribution by a RIC or a REIT is treated as a dividend under Code Sec. 301 provided:

  (1) the RIC or REIT makes the distribution to its shareholders with respect to its stock;

  (2) the RIC or REIT's stock is publicly traded on an established U.S. securities market;

  (3) the distribution is declared with respect to a tax year ending on or before December 31, 2009;

  (4) each shareholder may elect to receive the entire amount due under the declaration either in money or stock subject of equivalent value, subject to a limitation on the amount to be distributed in the aggregate to all shareholders (the cash limitation);

  (5) the number of shares to be received by any shareholder will be determined, as close as practicable to the payment date, using a formula that is designed to equalize the value of the shares with the amount of money that could be received instead; and

  (6) shareholders participating in a dividend reinvestment plan (DRIP) meet certain requirements.

 
Rev. Proc. 2008-68, I.R.B. 2008-52, 1373, is amplified and superseded.

Rev. Proc. 2009-15, 2009FED ¶46,236

Other References:

 
Code Sec. 305

  CCH Reference - 2009FED ¶15,402.026

  CCH Reference - 2009FED ¶15,402.1385

  Tax Research Consultant

  CCH Reference - TRC RIC: 3,000
CCH Reference -
TRC RIC: 6,150