SECTION 1. PURPOSE

This notice describes temporary regulations that will be issued under § 1(h) of the Internal Revenue Code, effective for

1997–47 I.R.B. 7 November 24, 1997

year); (2) it has a net capital gain during the pre-November (for a RIC) or pre-January (for a REIT) portion of its taxable year; and (3) it is not required to make the deferral adjustment.

If a RIC or REIT is required to make a bifurcation adjustment, it must calculate the maximum distributable 20% rate gain and the maximum distributable unrecaptured section 1250 gain separately for the pre-November (pre-January for REITs) portion of the year and for the post-October (post-December for REITs) portion of the year, as if the two portions of the year were separate taxable years. Then, the maximum distributable 20% rate gain and the maximum distributable unrecaptured section 1250 gain for the taxable year equals the sum of the maximum distributable amounts for gains in that group determined for each portion of the year.

under § 855, § 858, or § 860 as being paid during a taxable year that ends on or before that date, the dividend is a 28% rate gain distribution.

For purposes of this notice, a designation of undistributed capital gains under § 852(b)(3)(D) or § 857(b)(3)(D) is considered to be the designation of a dividend as a capital gain dividend.