CAPITAL LOSS CARRYOVERS OF REGULATED INVESTMENT COMPANIES.

SEC. 101. CAPITAL LOSS CARRYOVERS OF REGULATED INVESTMENT COMPANIES.(a) In General.—Subsection (a) of section 1212 is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph:“(3) Regulated investment companies.—“(A) In general.—If a regulated investment company has a net capital loss for any taxable year—“(i) paragraph (1) shall not apply to such loss,“(ii) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss arising on the first day of the next taxable year, and“(iii) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss arising on the first day of the next taxable year.“(B) Coordination with general rule.—If a net capital loss to which paragraph (1) applies is carried over to a taxable year of a regulated investment company—“(i) Losses to which this paragraph applies.—Clauses (ii) and (iii) of subparagraph (A) shall be applied without regard to any amount treated as a short-term capital loss under paragraph (1).“(ii) Losses to which general rule applies.—Paragraph (1) shall be applied by substituting ‘net capital loss for the loss year or any taxable year thereafter (other than a net capital loss to which paragraph (3)(A) applies)’ for ‘net capital loss for the loss year or any taxable year thereafter’.”.(b) Conforming Amendments.—(1) Subparagraph (C) of section 1212(a)(1) is amended to read as follows:“(C) a capital loss carryover to each of the 10 taxable years succeeding the loss year, but only to the extent such loss is attributable to a foreign expropriation loss,”.(2) Paragraph (10) of section 1222 is amended by striking “section 1212” and inserting “section 1212(a)(1)”.(c) Effective Date.—(1) In general.—Except as provided in paragraph (2), the amendments made by this section shall apply to net capital 124 STAT. 3539 losses for taxable years beginning after the date of the enactment of this Act.(2) Coordination rules.—Subparagraph (B) of section 1212(a)(3) of the Internal Revenue Code of 1986, as added by this section, shall apply to taxable years beginning after the date of the enactment of this Act.