SECTION 1. PURPOSE

This notice provides guidance to regulated investment companies (“RICs”) and their shareholders under §§ 1(h) and 852(b) of the Internal Revenue Code concerning capital gain dividends of RICs. Notice 97–64, 1997–2 C.B. 323, described regulations to be issued under § 1(h) for RICs and real estate investment trusts (“REITs”). Notice 2004–39, 2004–1 C.B. 982, provided related guidance on the effect of subsequent changes to § 1(h). This notice addresses how changes to § 852 made by the Regulated Investment Company Modernization Act of 2010 (the “RIC Modernization Act”), Pub. L. No. 111–325, 124 Stat. 3537, affect the bifurcation adjustment described in Notice 97–64 and other aspects of the computation of capital gain dividends of RICs. ¹ This notice does not address REITs.