26 U.S.C. § 854
§ 854. Limitations applicable to dividends received from regulated investment company
No plain-English explainer yet. Below is the official text. Explainers are being added section by section.
History
Part of the code since 1954. Last changed December 22, 2010 by the Public Law 111-325.
Every change, newest first (11)
- December 22, 2010Public Law 111-325
- October 4, 2004Public Law 108-311
- May 28, 2003Jobs and Growth Tax Relief Reconciliation Act of 2003
- November 10, 1988Technical and Miscellaneous Revenue Act of 1988
- December 22, 1987Omnibus Budget Reconciliation Act of 1987
- October 22, 1986Tax Reform Act of 1986
- July 18, 1984Deficit Reduction Act of 1984
- August 13, 1981Economic Recovery Tax Act of 1981
- April 2, 1980Public Law 96-223
- February 26, 1964Public Law 88-272
- August 16, 1954Internal Revenue Code of 1954 (original text)
The law as written
Current through Public Law 119-102. Amendment notes omitted.
For purposes of section 1(h)(11) (relating to maximum rate of tax on dividends) and section 243 (relating to deductions for dividends received by corporations), a capital gain dividend (as defined in section 852(b)(3)) received from a regulated investment company shall not be considered as a dividend.
In any case in which—
a dividend is received from a regulated investment company (other than a dividend to which subsection (a) applies), and
such investment company meets the requirements of section 852(a) for the taxable year during which it paid such dividend,
then, in computing any deduction under section 243, there shall be taken into account only that portion of such dividend reported by the regulated investment company as eligible for such deduction in written statements furnished to its shareholders and such dividend shall be treated as received from a corporation which is not a 20-percent owned corporation.
In any case in which—
a dividend is received from a regulated investment company (other than a dividend to which subsection (a) applies),
such investment company meets the requirements of section 852(a) for the taxable year during which it paid such dividend, and
the qualified dividend income of such investment company for such taxable year is less than 95 percent of its gross income,
then, in computing qualified dividend income, there shall be taken into account only that portion of such dividend reported by the regulated investment company as qualified dividend income in written statements furnished to its shareholders.
For purposes of clause (i), in the case of 1 or more sales or other dispositions of stock or securities, the term “gross income” includes only the excess of—
the net short-term capital gain from such sales or dispositions, over
the net long-term capital loss from such sales or dispositions.
The aggregate amount which may be reported as dividends under subparagraph (A) shall not exceed the aggregate dividends received by the company for the taxable year.
The aggregate amount which may be reported as qualified dividend income under subparagraph (B) shall not exceed the sum of—
the qualified dividend income of the company for the taxable year, and
the amount of any earnings and profits which were distributed by the company for such taxable year and accumulated in a taxable year with respect to which this part did not apply.
For purposes of this subsection—
In computing the amount of aggregate dividends received, there shall only be taken into account dividends received from domestic corporations.
For purposes of subparagraph (A), the term “dividend” shall not include any distribution from—
a corporation which, for the taxable year of the corporation in which the distribution is made, or for the next preceding taxable year of the corporation, is a corporation exempt from tax under section 501 (relating to certain charitable, etc., organizations) or section 521 (relating to farmers’ cooperative associations), or
a real estate investment trust which, for the taxable year of the trust in which the dividend is paid, qualifies under part II of subchapter M (section 856 and following).
In determining the amount of any dividend for purposes of this paragraph, a dividend received from a regulated investment company shall be subject to the limitations prescribed in this section.
For purposes of subparagraph (A) of paragraph (1), an amount shall be treated as a dividend for the purpose of paragraph (1) only if a deduction would have been allowable under section 243 to the regulated investment company determined—
as if section 243 applied to dividends received by a regulated investment company,
after the application of section 246 (but without regard to subsection (b) thereof), and
after the application of section 246A.
For purposes of this subsection, the term “qualified dividend income” has the meaning given such term by section 1(h)(11)(B).