DISTRIBUTIONS IN REDEMPTION OF STOCK OF A REGULATED INVESTMENT COMPANY.

SEC. 306. DISTRIBUTIONS IN REDEMPTION OF STOCK OF A REGULATED INVESTMENT COMPANY.(a) Redemptions Treated as Exchanges.—(1) In general.—Subsection (b) of section 302 is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:“(5) Redemptions by certain regulated investment companies.—Except to the extent provided in regulations prescribed by the Secretary, subsection (a) shall apply to any distribution in redemption of stock of a publicly offered regulated investment company (within the meaning of section 67(c)(2)(B)) if—“(A) such redemption is upon the demand of the stockholder, and“(B) such company issues only stock which is redeemable upon the demand of the stockholder.”.(2) Conforming amendment.—Subsection (a) of section 302 is amended by striking “or (4)” and inserting “(4), or (5)”.(b) Losses on Redemptions Not Disallowed for Fund-of-funds Regulated Investment Companies.—Paragraph (3) of section 267(f) is amended by adding at the end the following new subparagraph:“(D) Redemptions by fund-of-funds regulated investment companies.—Except to the extent provided in regulations prescribed by the Secretary, subsection (a)(1) shall not apply to any distribution in redemption of stock of a regulated investment company if—124 STAT. 3550“(i) such company issues only stock which is redeemable upon the demand of the stockholder, and“(ii) such redemption is upon the demand of another regulated investment company.”.(c) Effective Date.—The amendments made by this section shall apply to distributions after the date of the enactment of this Act.