SECTION 9. CAPITAL LOSS

CARRYOVERS

Because post-October losses are subject to deferral, a RIC’s capital gain or

loss computation for a taxable year may depend in part on whether a capital loss carryover from a prior year is treated as arising on the first day of the taxable year or ratably over the taxable year. Section 101 of the RIC Modernization Act changed the treatment of capital loss carryovers of RICs for years beginning after the date of its enactment (December 22, 2010) in several ways. Under § 1212(a)(3), capital loss carryovers are now treated as losses arising on the first day of the taxable year to which they are carried over.

Capital loss carryovers arising before the date of enactment of the RIC Modernization Act will likewise be treated as arising on the first day of the taxable year to which they are carried over and not as arising ratably during the year.