TRANSACTIONS IN REGULATED INVESTMENT COMPANY SHARES AROUND TIME OF DISTRIBUTING CAPITAL GAIN DIVIDENDS.

SEC. 39. TRANSACTIONS IN REGULATED INVESTMENT COMPANY SHARES AROUND TIME OF DISTRIBUTING CAPITAL GAIN DIVIDENDS. (a) Loss on Stock Held Less Than 31 Days.— Section 852 (b) (relating to taxation of regulated investment companies and their shareholders) is amended by adding at the end thereof the following new paragraph: “(4) Loss on sale or exchange of stock held less than 31 days.— If— “(A) under subparagraph (B) or (D) of paragraph (3) a shareholder of a regulated investment company is required, with respect to any share, to treat any amount as a long-term capital gain, and “(B) such share is held by the taxpayer for less than 31 days, then any loss on the sale or exchange of such share shall, to the extent of the amount described in subparagraph (A) of this paragraph, be treated as loss from the sale or exchange of a capital asset held for more than 6 months. For purposes of this paragraph, the rules of section 246 (c) (3) shall apply in determining whether any share of stock has been held for less than 31 days; except that ‘30 days’ shall be substituted for the number of days specified in subparagraph (B) of section 246 (c) (3).” (b) Effective Date.—The amendment made by subsection (a) shall apply with respect to taxable years ending after December 31, 1957, but only with respect to shares of stock acquired after December 31, 1957.