SEC. 8. SECTION 1202 GAIN

In the future, RICs may recognize gain from the sale or exchange of qualified small business stock held for more than 5 years that may be distributed to shareholders subject to certain limitations provided by § 1202(g). It is expected that the temporary regulations will provide guidance on how RICs may designate dividends as “section 1202 gain distributions.” This guidance is expected to provide that: (1) section 1202 gain distributions will be designated separately for different issuers of qualified small business stock; (2) the exclusion from income permitted by § 1202 will be determined at the shareholder level not the RIC level; and (3) the maximum distributable section 1202 gain for each issuer will be calculated separately from limitations on all other classes of capital gain dividends but in the aggregate will not exceed the RIC’s net capital gain.

1997–47 I.R.B. 9 November 24, 1997

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number.

The collections of information in this notice are in sections 3, 9 and 10. This information is required to permit RIC and REIT shareholders to properly report income following the amendment of § 1(h) by the 1997 Act. The information collected will be used by RIC and REIT shareholders reporting income. The collection of information is mandatory. The likely respondents are businesses and other for-profit institutions.

The burden for the collections of information in section 3 is as follows:

The estimated total annual reporting and/or recordkeeping burden is 1500 hours.

The estimated annual burden per respondent varies from 1/4 hour to 10 hours, depending on individual circumstances, with an estimated average of 1/2 hour. The estimated number of respondents is 3,000.

The estimated annual frequency of responses is annually.

The burden for the collection of information in sections 9 and 10 is reflected in the burden for Form 1099–DIV and Form 2439. Books or records relating to a collection of information must be retained as

long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

DRAFTING INFORMATION

The principal author of this notice is Kenneth Christman of the Office of Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this notice contact Kenneth Christman on (202) 622-3950 (not a tollfree call).

26 CFR 601.201: Rulings and determination letters. (Also Part I, §§ 355; 1.355–2.)

Rev. Proc. 97–53