Undistributed Capital Gains Tax Return

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2438

Undistributed Capital Gains Tax Return

Form
(Rev. December 2012)
Department of the Treasury
Internal Revenue Service

▶

For calendar year 20

OMB No. 1545-0144

Attach a copy of this form to Form 1120-RIC or to Form 1120-REIT.
▶ Information about Form 2438 is at www.irs.gov/form2438.

or tax year beginning

, 20

, ending

, 20
Employer identification number

Name of fund or REIT

DRAFT AS OF
August 23, 2012
DO NOT FILE
Please
Type
or
Print

Part I

Number, street, and room or suite no. (If a P.O. box, see instructions.)
City or town, state, and ZIP code

Short-Term Capital Gains and Losses—Assets Held One Year or Less

(a) Description of property (Example, 100 shares
of Z Co.)

(b) Date acquired
(mo., day, yr.)

(c) Date sold
(mo., day, yr.)

(e) Cost or other
basis (see
instructions)

(d) Sales price (see
instructions)

(f) Gain or (loss)
((d) less (e))

1

2

Short-term capital gain from installment sales from Form 6252, line 26 or 37 .

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2

3

Unused capital loss carryover (attach computation) .

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3

4

Net short-term capital gain or (loss). Combine lines 1 through 3. (See instructions.)

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4

Part II

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Long-Term Capital Gains and Losses—Assets Held More Than One Year

(

)

5

6

Gain from Form 4797, column (g), line 7 or 9

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6

7

Long-term capital gain from installment sales from Form 6252, line 26 or 37 .

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7

8

Net long-term capital gain. Combine lines 5 through 7 .

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8

9a

Net capital gain. Enter excess of net long-term capital gain (line 8) over net short-term capital loss
(line 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Part III Summary of Parts I and II

b Capital gain dividends
. . . . . . . . . . . . . . .
10
Undistributed capital gains. Subtract line 9b from line 9a . . . .
11
Amount of undistributed capital gains on line 10 designated
857(b)(3)(D) . . . . . . . . . . . . . . . . . . .
12
Amount of undistributed capital gains not designated under section
(3)(D) or 857(b)(3)(D). Subtract line 11 from line 10. (See instructions.)
13

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. . .
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section
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12
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9a
9b
10

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. . . . .
852(b)(3)(D) or
. . . . .

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11

13

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Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,
correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Date

Signature of officer

Paid
Preparer
Use Only

▲

▲

Sign
Here

Capital gains tax. Multiply line 11 by 35% (.35) .

. .
. .
under
. .
852(b)
. .

Print/Type preparer’s name

Preparer's signature

Date

Title
Check
if
self-employed

Firm’s name

▶

Firm's EIN

Firm's address

▶

Phone no.

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 11856I

PTIN

▶

Form 2438 (Rev. 12-2012)

DRAFT AS OF
August 23, 2012
DO NOT FILE
[This page left blank intentionally]

Page 3

Form 2438 (Rev. 12-2012)

General Instructions
Section references are to the
Internal Revenue Code.

Future Developments

In addition, attach a copy of Form
2438 to Form 1120-RIC or Form
1120-REIT.

Who Must Sign

penalized 1/2 of 1% of the unpaid tax
for each month or part of a month
the tax is not paid, up to a maximum
of 25% of the unpaid tax. The
penalty will not be imposed if the
RIC or REIT can show that the
failure to pay on time was due to
reasonable cause.

DRAFT AS OF
August 23, 2012
DO NOT FILE

For the latest information about
developments related to Form 2438
and its instructions, such as
legislation enacted after they were
published, go to
www.irs.gov/form2438.

What's New

A RIC or REIT will now have to enter
the net short-term capital gain from
line 4 and the undistributed capital
gains not designated under section
852(b)(3)(D) or 857(b)(3)(D) from line
12 on Form 8949, Sales and Other
Dispositions of Capital Assets. See
the instructions for lines 4 and 12.

Who Must File

Regulated investment companies
(RICs) and real estate investment
trusts (REITs) file Form 2438 if the
RIC (defined below) or REIT is
electing to designate undistributed
capital gains under section 852(b)(3)
(D) or 857(b)(3)(D).
If a RIC has more than one fund,
each fund must file a separate Form
2438. The term “fund” as used in
these instructions refers to the
definition in section 851(g) and to
any RIC that does not have more
than one portfolio of assets.

Purpose of Form
Form 2438 is used by RICs or REITs
to figure income tax on undistributed
capital gains designated under
section 852(b)(3)(D) or section
857(b)(3)(D).
See the instructions for Schedule
D (Form 1120) for a definition of
capital assets and information on
figuring and reporting capital gains
and losses.

When To File
File Form 2438 by the 30th day after
the end of the RIC’s or the REIT’s
tax year.

Where To File
File the original form with the:
Internal Revenue Service Center
201 W. Rivercenter Blvd.
Covington, KY 41011

Form 2438 must be signed and
dated by:
• The president, vice president,
treasurer, assistant treasurer, chief
accounting officer or
• Any other corporate officer (such
as tax officer) authorized to sign.
If a return is filed on behalf of a
RIC or REIT by a receiver, trustee or
assignee, the fiduciary must sign the
return, instead of the corporate
officer. Returns and forms signed by
a receiver or trustee in bankruptcy
on behalf of a RIC or REIT must be
accompanied by a copy of the order
or instructions of the court
authorizing signing of the return or
form.
For a return that is being filed for a
series fund (discussed in section
851(g)), the return may be signed by
any officer authorized to sign for the
RIC in which the fund is a series.
If a corporate officer completes
Form 2438, the Paid Preparer Use
Only area should remain blank.
Anyone who prepares Form 2438
but does not charge the RIC or REIT
should not sign the return. Generally,
anyone who is paid to prepare Form
2438 must sign it and fill in the Paid
Preparer Use Only area.
Paid preparer. The paid preparer
must complete the Paid Preparer
Use Only area (including signing the
form in the space provided for the
preparer's signature) and give a
copy of Form 2438 to the taxpayer.

Penalty for Late Filing of Return
A RIC or REIT that does not file its
tax return by the due date, including
extensions, may be penalized 5% of
the unpaid tax for each month or
part of a month the return is late, up
to a maximum of 25% of the unpaid
tax. The minimum penalty for a
return that is more than 60 days late
is the smaller of the tax due or $135.
The penalty will not be imposed if
the RIC or REIT can show that the
failure to file on time was due to
reasonable cause.

Penalty for Late Payment of Tax
A RIC or REIT that does not pay the
tax when due generally may be

Reasonable cause determinations.
If the RIC or REIT receives a notice
about penalties after it files its return,
send the IRS an explanation and we
will determine if the RIC or REIT
meets the reasonable cause criteria.
Do not attach an explanation when
the RIC's or REIT's return is filed.

Electronic Deposit Requirement
RICs and REITs must use electronic
funds transfers to make all federal
tax deposits (such as deposits of
employment tax, excise tax, and
corporate income tax). Generally,
electronic fund transfers are made
using the Electronic Federal Tax
Payment System (EFTPS). However,
if you do not want to use EFTPS,
you can arrange for your tax
professional, financial institution,
payroll service, or other trusted third
party to make deposits on your
behalf. Also, you may arrange for
your financial institution to initiate a
same-day tax wire payment
(discussed below) on your behalf.
EFTPS is a free service provided by
the Department of Treasury.
Services provided by your tax
professional, financial institution,
payroll service, or other third party
may have a fee.
For more information about
EFTPS, or to enroll in EFTPS, visit
the EFTPS website at
www.eftps.gov or call
1-800-555-4477. You can also get
Pub. 966, Electronic Federal Tax
Payment System: A Guide to Getting
Started.
Note. Forms 8109 and 8109-B,
Federal Tax Deposit Coupon, can no
longer be used to make federal tax
deposits.
Depositing on time. For deposits
made by EFTPS to be on time, the
RIC or REIT must initiate the deposit
by 8 p.m. Eastern time on the day
before the date the deposit is due. If
the RIC or REIT uses a third party to
make the deposits on its behalf, they
may have different cutoff times.

Page 4

Form 2438 (Rev. 12-2012)

Same-day wire payment option. If
the RIC or REIT fails to initiate a
deposit transaction on EFTPS by
8 p.m. Eastern time the day before
the date a deposit is due, it can still
make the deposit on time by using
the Federal Tax Application (FTA).
Before using the same-day wire
payment option, the RIC or REIT will
need to make arrangements with its
financial institution ahead of time.
Please check with the financial
institution regarding availability,
deadlines, and costs. To learn more
about making a same-day wire
payment and to download the
Same-Day Payment Worksheet, visit
www.eftps.gov.

Column (e). If gross sales price is
reported in column (d), increase the
cost or other basis by any expense
of sale such as broker’s fees,
commissions, or option premiums
before entering an amount in
column (e).
A RIC’s or REIT’s basis in an asset
it held on January 1, 2001, for which
the RIC or REIT made an election to
recognize any gain (under section
311 of the Taxpayer Relief Act of
1997) is the asset’s closing market
price or fair market value, whichever
applies, on the date of the deemed
sale and reacquisition, whether the
deemed sale resulted in a gain or
unallowed loss.

Paperwork Reduction Act Notice.
We ask for the information on this
form to carry out the Internal
Revenue laws of the United States.
You are required to give us the
information. We need it to ensure
that you are complying with these
laws and to allow us to figure and
collect the right amount of tax.
You are not required to provide
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number. Books or records relating to
a form or its instructions must be
retained as long as their contents
may become material in the
administration of any Internal
Revenue law. Generally, tax returns
and return information are
confidential, as required by section
6103.
The time needed to complete and
file this form will vary depending on
individual circumstances. The
estimated average time is:
Recordkeeping . . 8 hr., 36 min.
Learning about the
law or the form . . . . 30 min.
Preparing and sending
the form to the IRS . . . 39 min.
If you have comments concerning
the accuracy of these time estimates
or suggestions for making this form
simpler, we would be happy to hear
from you. You can write to the
Internal Revenue Service, Tax
Products Coordinating Committee,
SE:W:CAR:MP:T:M:S, 1111
Constitution Ave. NW, IR-6526,
Washington, DC 20224.
Do not send the tax form to this
office. Instead, see Where To File.

DRAFT AS OF
August 23, 2012
DO NOT FILE

Specific Instructions

Period covered. Fill in the tax year
space at the top of the form.
Address. Include the suite, room, or
other unit number after the street
address. If the Post Office does not
deliver mail to the street address
and the RIC or REIT has a P.O. box,
show the box number instead of the
street address.

Lines 1 and 5
Column (b)—Date acquired. A
RIC’s or REIT’s acquisition date for
an asset it held on January 1, 2001,
for which it made an election to
recognize any gain (under section
311 of the Taxpayer Relief Act of
1997) is the date of the deemed sale
and reacquisition.
Column (d). Enter either gross sales
price or net sales price. If net sales
price is entered, do not increase the
cost or other basis in column (e) by
any expenses reflected in the net
sales price.

Line 4

Enter any net short-term capital gain
from line 4 in Part I of Form 8949.
Also identify the gain as “Net shortterm capital gain from line 4, Form
2438” in column (a) of Form 8949.
See Form 8949, Schedule D (Form
1120), and the related instructions
for details.

Line 12
Enter the amount from line 12 in
Part II of Form 8949. Also identify
the gain as “Undistributed capital
gains not designated (from Form
2438)” in column (a) of Form 8949.
See Form 8949, Schedule D (Form
1120), and the related instructions
for details.

Line 13
Deposit the tax due by the 30th day
after the end of the tax year.