PROVISIONS RELATED TO REGULATED INVESTMENT COMPANIES.

SEC. 7204. PROVISIONS RELATED TO REGULATED INVESTMENT COMPANIES. (a) Requirement to Distribute 98 Percent of Ordinary Income.— (1) In general.—Subparagraph (A) of section 4982(b)(1) (defining required distribution) is amended by striking “97 percent” and inserting “98 percent”. (2) Effective date.—The amendment made by paragraph (1) shall apply to calendar years ending after July 10, 1989. (b) Treatment of Certain Mutual Fund Load Charges.— (1) In general.—Section 852 (relating to taxation of regulated investment companies and their shareholders) is amended by adding at the end thereof the following new subsection: “(f) Treatment of Certain Load Charges.— “(1) In general.—If— “(A) the taxpayer incurs a load charge in acquiring stock in a regulated investment company and, by reason of incurring such charge or making such acquisition, the taxpayer acquires a reinvestment right, “(B) such stock is disposed of before the 91st day after the date on which such stock was acquired, and “(C) the taxpayer subsequently acquires stock in such regulated investment company or in another regulated investment company and the otherwise applicable load charge is reduced by reason of the reinvestment right, the load charge referred to in subparagraph (A) (to the extent it does not exceed the reduction referred to in subparagraph (C)) shall not be taken into account for purposes of determining the amount of gain or loss on the disposition referred to in subparagraph (B). To the extent such charge is not taken into account in determining the amount of such gain or loss, such charge shall be treated as incurred in connection with the acquisition referred to in subparagraph (C) (including for purposes of reapplying this paragraph). “(2) Definitions and special rules.—For purposes of this subsection— 103 STAT. 2335 “(A) Load charge.—The term load charge’ means any sales or similar charge incurred by a person in acquiring stock of a regulated investment company. Such term does not include any charge incurred by reason of the reinvestment of a dividend. “(B) Reinvestment right.—The term ‘reinvestment right’ means any right to acquire stock of 1 or more regulated investment companies without the payment of a load charge or with the payment of a reduced charge. “(C) Nonrecognition transactions.—If the taxpayer acquires stock in a regulated investment company from another person in a transaction in which gain or loss is not recognized, the taxpayer shall succeed to the treatment of such other person under this subsection.” (2) Effective date.—The amendment made by paragraph (1) shall apply to charges incurred after October 3, 1989, in taxable years ending after such date. (c) Regulated Investment Companies Required To Accrue Dividends on the Ex-Dividend Date.— (1) In general.—Subsection (b) of section 852 (relating to treatment of companies and shareholders) is amended by adding at the end thereof the following new paragraph: “(9) Dividends treated as received by company on ex-dividend date.—For purposes of this title, if a regulated investment company is the holder of record of any share of stock on the record date for any dividend payable with respect to such stock, such dividend shall be included in gross income by such company as of the later of— “(A) the date such share became ex-dividend with respect to such dividend, or “(B) the date such company acquired such share.” (2) Effective date.—The amendment made by paragraph (1) shall apply to dividends in cases where the stock becomes ex-dividend after the date of the enactment of this Act.