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§ 854. Limitations applicable to dividends received from regulated investment company
(a)
Capital gain dividend
For purposes of section
1
(h)(11) (relating to maximum rate of tax on dividends) and section
243 (relating to deductions for dividends received by corporations), a capital gain dividend (as defined in section
852
(b)(3)) received from a regulated investment company shall not be considered as a dividend.
(b)
Other dividends
(1)
Amount treated as dividend
(A)
Deduction under section
243
In any case in which—
(i)
a dividend is received from a regulated investment company (other than a dividend to which subsection (a) applies), and
(ii)
such investment company meets the requirements of section
852
(a) for the taxable year during which it paid such dividend,
then, in computing any deduction under section
243, there shall be taken into account only that portion of such dividend designated under this subparagraph by the regulated investment company and such dividend shall be treated as received from a corporation which is not a 20-percent owned corporation.
(B)
Maximum rate under section
1
(h)
(i)
In general
In any case in which—
(I)
a dividend is received from a regulated investment company (other than a dividend to which subsection (a) applies),
(II)
such investment company meets the requirements of section
852
(a) for the taxable year during which it paid such dividend, and
(III)
the qualified dividend income of such investment company for such taxable year is less than 95 percent of its gross income,
then, in computing qualified dividend income, there shall be taken into account only that portion of such dividend designated by the regulated investment company.
(C)
Limitations
(i)
Subparagraph (a)
The aggregate amount which may be designated as dividends under subparagraph (A) shall not exceed the aggregate dividends received by the company for the taxable year.
(2)
Notice to shareholders
The amount of any distribution by a regulated investment company which may be taken into account as qualified dividend income for purposes of section
1
(h)(11) and as dividends for purposes of the deduction under section
243 shall not exceed the amount so designated by the company in a written notice to its shareholders mailed not later than 60 days after the close of its taxable year.
(3)
Aggregate dividends
For purposes of this subsection—
(A)
In general
In computing the amount of aggregate dividends received, there shall only be taken into account dividends received from domestic corporations.
(B)
Dividends
For purposes of subparagraph (A), the term “dividend” shall not include any distribution from—
(i)
a corporation which, for the taxable year of the corporation in which the distribution is made, or for the next preceding taxable year of the corporation, is a corporation exempt from tax under section
501 (relating to certain charitable, etc., organizations) or section
521 (relating to farmers’ cooperative associations), or
(ii)
a real estate investment trust which, for the taxable year of the trust in which the dividend is paid, qualifies under part II of subchapter M (section
856 and following).
(4)
Special rule for computing deduction under section
243
For purposes of subparagraph (A) of paragraph (1), an amount shall be treated as a dividend for the purpose of paragraph (1) only if a deduction would have been allowable under section
243 to the regulated investment company determined—
(5)
Qualified dividend income
For purposes of this subsection, the term “qualified dividend income” has the meaning given such term by section
1
(h)(11)(B).
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Notes
No Update(s)
Parallel authorities (CFR)
PDF (5 pages)
Title 26 RSS
Notes
No Update(s)
Parallel authorities (CFR)
PDF (5 pages)
Title 26 RSS
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