SECTION 6. DEFERRAL UNDER

§ 852(b)(8)

The deferral adjustment described in section 6 of Notice 97–64 was a statutory requirement that section 308 of the RIC Modernization Act replaced with an elec

5In addition to the limitations applicable to additional reports or designations (which are discussed in this section 5), the basic report or designation as a capital gain dividend or undistributed capital gain is limited by the maximum amounts set forth in § 852(b)(3)(C) and § 852(b)(3)(D), respectively.

June 15, 2015 1060 Bulletin No. 2015–24

tive deferral regime for taxable years beginning after December 22, 2010.

Under § 852(b)(8)(A), a RIC generally may elect to treat any portion of a qualified late-year loss for a taxable year as arising on the first day of the following taxable year for all purposes of the Code. Under § 852(b)(8)(B), a qualified lateyear loss includes a post-October capital loss. Under § 852(b)(8)(C), a postOctober capital loss means any net capital loss attributable to the portion of the taxable year after October 31, or if there is no such loss, any net long-term capital loss or net short-term capital loss attributable to that portion of the taxable year.

If a RIC elects under § 852(b)(8)(A) to treat all or a portion of its post-October capital loss as arising on the first day of the following taxable year, then for all purposes of the Code, all gains and losses taken into account in computing the postOctober capital loss are treated as arising on the first day of the following taxable year, except for an amount of those losses (selected as described in the following paragraph) that equals in the aggregate the amount (if any) of the post-October capital loss that is not deferred. For example, if, for a taxable year, (i) a RIC has a post-October capital loss that is a net long-term capital loss attributable to the post-October portion of its taxable year and (ii) the RIC elects to defer all but $5000 of that net long-term capital loss, then every one of the RIC’s post-October long-term capital gains is treated as arising on the first day of the following taxable year, and every one of the RIC’s post-October long-term capital losses is treated as arising on the first day of the following taxable year, except for longterm capital losses that in the aggregate equal $5000.

If, for a taxable year, (i) a RIC has a post-October capital loss that is a net capital loss attributable to the post-October portion of its taxable year, and (ii) the RIC elects to defer less than the entire amount of that post-October capital loss, then as

part of that election, the RIC determines the extent to which its long-term or shortterm capital losses constitute the portion of the loss that is treated as arising in the taxable year (that is, the portion not deferred). If, for a taxable year, (i) a RIC has a post-October capital loss that includes long-term capital losses, and (ii) the RIC’s election under § 852(b)(8)(A) (including the decision described in the preceding sentence) results in the deferral of less than all of those long-term capital losses, then as part of that election, the RIC determines the extent to which its losses from each rate group constitute the portion of the long-term capital loss that is treated as arising in the taxable year.

The deferral of a post-October capital loss under § 852(b)(8) does not extend the holding period associated with any of the gains or losses that, as a result of the deferral, are treated as arising on the first day of the following taxable year.

Pending further guidance, a RIC makes the election described in § 852(b)(8)(A) for a taxable year by giving effect to its elective deferral in computing its capital gains and losses for that taxable year and by completing its income tax return (including any necessary schedules) for the taxable year in accordance with the instructions for those items applicable to the election.