Code Section 267
| Code Section | Effective Date | Name of Act | Name of Provision | 10yr Revenue Estimate ($millions) |
|---|---|---|---|---|
| 267 and 302 | 12/22/2010 | Regulated Investment Company Modernization Act of 2010 | Distributions in Redemption of Stock of RICs | -99 |
Distributions in Redemption of Stock of RICs
Explanation of Provision
Exchange treatment
The Act provides that, except to the extent provided in regulations, the redemption of stock of a publicly offered RIC is treated as an exchange if the redemption is upon the demand of the shareholder and the company issues only stock which is redeemable upon the demand of the shareholder. A publicly offered RIC is a RIC the shares of which are (1) continuously offered pursuant to a public offering, (2) regularly traded on an established securities market, or (3) held by no fewer than 500 persons at all times during the taxable year.
Loss disallowance
The Act provides that, except to the extent provided in regulations, the loss deferral rule does not apply to any redemption of stock of a RIC if the RIC issues only stock which is redeemable upon the demand of the shareholder and the redemption is upon the demand of a shareholder which is another RIC.
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