The IRS has ruled in Rev. Rul. 2012-29 that the loss carryover rules in amended Section 1212(a) apply beginning with any net capital loss recognized in the period that determines a regulated investment company's (RIC's) required distribution for calendar year 2011.
Section 4982(a) imposes "on every RIC for each calendar year" an excise tax equal to 4% of the excess, if any, of the required distribution for the calendar year over the distributed amount for that same calendar year. Section 4982(b)(1) defines "required distribution" to mean, related to any calendar year, the sum of 98% of the RIC's ordinary income for that calendar year, plus 98.2% percent of the RIC's "capital gain net income for the one-year period ending on Oct. 31 of such calendar year."
Effective for taxable years after Dec. 22, 2010, Section 1212(a) was amended to allow RICs to carry forward net capital losses indefinitely and to preserve the treatment of components of those losses as long-term or short-term.
Rev. Rul. 2012-29 concludes that, to the extent that the capital gains and losses recognized for the period from Nov. 1, 2010, to Oct. 31, 2011 (the capital gain net income year), result in a net capital loss, the net capital loss is carried forward indefinitely for purposes of Section 4982.
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