ELECTIVE DEFERRAL OF CERTAIN LATE-YEAR LOSSES OF REGULATED INVESTMENT COMPANIES.

SEC. 308. ELECTIVE DEFERRAL OF CERTAIN LATE-YEAR LOSSES OF REGULATED INVESTMENT COMPANIES.(a) In General.—Paragraph (8) of section 852(b) is amended to read as follows:“(8) Elective deferral of certain late-year losses.—“(A) In general.—Except as otherwise provided by the Secretary, a regulated investment company may elect for any taxable year to treat any portion of any qualified late-year loss for such taxable year as arising on the first day of the following taxable year for purposes of this title.“(B) Qualified late-year loss.—For purposes of this paragraph, the term ‘qualified late-year loss’ means—“(i) any post-October capital loss, and“(ii) any late-year ordinary loss.“(C) Post-october capital loss.—For purposes of this paragraph, the term ‘post-October capital loss’ means the greatest of—“(i) the net capital loss attributable to the portion of the taxable year after October 31,“(ii) the net long-term capital loss attributable to such portion of the taxable year, or“(iii) the net short-term capital loss attributable to such portion of the taxable year.“(D) Late-year ordinary loss.—For purposes of this paragraph, the term ‘late-year ordinary loss’ means the excess (if any) of—“(i) the sum of—“(I) the specified losses (as defined in section 4982(e)(5)(B)(ii)) attributable to the portion of the taxable year after October 31, plus“(II) the ordinary losses not described in subclause (I) attributable to the portion of the taxable year after December 31, over“(ii) the sum of—124 STAT. 3551“(I) the specified gains (as defined in section 4982(e)(5)(B)(i)) attributable to the portion of the taxable year after October 31, plus“(II) the ordinary income not described in subclause (I) attributable to the portion of the taxable year after December 31.“(E) Special rule for companies determining required capital gain distributions on taxable year basis.—In the case of a company to which an election under section 4982(e)(4) applies—“(i) if such company’s taxable year ends with the month of November, the amount of qualified late-year losses (if any) shall be computed without regard to any income, gain, or loss described in subparagraphs (C), (D)(i)(I), and (D)(ii)(I), and“(ii) if such company’s taxable year ends with the month of December, subparagraph (A) shall not apply.”.(b) Conforming Amendments.—(1) Subsection (b) of section 852 is amended by striking paragraph (10).(2) Paragraph (2) of section 852(c) is amended by striking the first sentence and inserting the following: “For purposes of applying this chapter to distributions made by a regulated investment company with respect to any calendar year, the earnings and profits of such company shall be determined without regard to any net capital loss attributable to the portion of the taxable year after October 31 and without regard to any late-year ordinary loss (as defined in subsection (b)(8)(D)).”(3) Subparagraph (D) of section 871(k)(2) is amended by striking the last two sentences and inserting the following: “For purposes of this subparagraph, the net short-term capital gain of the regulated investment company shall be computed by treating any short-term capital gain dividend includible in gross income with respect to stock of another regulated investment company as a short-term capital gain.”.(c) Effective Date.—The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.