Schedule A—Deduction for Dividends Paid

Column (a) is used to determine the deduction for dividends paid resulting from income derived from ordinary dividends.

Column (b) is used to determine the deduction for dividends paid resulting from income derived from capital gain dividends.

Section 561 (taking into account sections 852(b)(7), 852(c)(3)(B), and 855(a)) determines the deduction for dividends paid. Do not take into account exempt-interest dividends defined in section 852(b)(5) or any amount reported for the tax year on Form 2438, line 9b. See section 852(b)(8) for information on post-October capital losses and late year ordinary losses.

Line 3. Dividends, both ordinary and capital gain, declared and payable to shareholders of record in October, November, or December are treated as paid by the RIC and received by each shareholder on December 31 of that calendar year provided that they are actually paid in January of the following calendar year. Enter on line 3 all such dividends not already included on line 1 or 2.

Line 6. Enter the foreign tax paid deduction allowed as an addition to the dividends paid deduction under section 853(b)(1)(B). See the instructions for item 10 of Schedule K for information on the election available under section 853(a).

Line 7. If the RIC elects under section 853A to pass through credits from qualified tax credit bonds to shareholders, increase the dividends paid deduction by the amount of the credits distributed to shareholders. To make the election, see the instructions for item 11 under Schedule K—Other Information.