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Abstract: 

The RIC Modernization Act of 2010 (the “Act”) significantly changed the federal tax law governing how a regulated investment company (RIC) must utilize capital losses incurred in tax years after its enactment. The Act affects when a RIC must take capital losses into account in determining its net capital gain (and earnings and profits). Exactly when a RIC is entitled to use its capital losses can be a key consideration when applying corporate tax law governing a RIC reorganization. In the event that a RIC is party to a reorganization, it is important for the RIC and its adviser to fully understand the Act’s implications so as to avoid potentially adverse consequences.

Keywords: regulated investment company; RIC; capital loss carryover; RIC Modernization Act of 2010; RICMOD; merger; mutual fund

Affiliations:  1: Deloitte Tax LLP.