(a) General rule
A regulated investment company—
(1) which holds (directly or indirectly) one or more tax credit bonds on one or more applicable dates during the taxable year, and
(2) which meets the requirements of section 852(a) for the taxable year (determined after the application of this section),
may elect the application of this section with respect to some or all of the credits allowable (determined without regard to this section and sections 54(c), 54A(c)(1), 54AA(c)(1), and 1397E(c)) 1 to the investment company during such taxable year with respect to such bonds.
(b) Effect of election
If the election provided in subsection (a) is in effect with respect to any credits for any taxable year—
(1) the regulated investment company—
(A) shall not be allowed such credits,
(B) shall include in gross income (as interest) for such taxable year the amount which would have been so included with respect to such credits had the application of this section not been elected,
(C) shall include in earnings and profits the amount so included in gross income, and
(D) shall be treated as making one or more distributions of money with respect to its stock equal to the amount of such credits on the date or dates (on or after the applicable date for any such credit) during such taxable year (or following the close of the taxable year pursuant to section 855) selected by the company, and
(2) each shareholder of such investment company shall—
(A) be treated as receiving such shareholder's proportionate share of any distribution of money which is treated as made by such investment company under paragraph (1)(D), and
(B) be allowed credits against the tax imposed by this chapter equal to the amount of such distribution, subject to the provisions of this title applicable to the credit involved.
(c) Statements 2 to shareholders
The amount treated as a distribution of money received by a shareholder under subsection (b)(2)(A) (and as credits allowed to such shareholder under subsection (b)(2)(B)) shall not exceed the amount so reported by the regulated investment company in a written statement furnished to such shareholder.
(d) Manner of making election
The election provided in subsection (a) shall be made in such manner as the Secretary may prescribe.
(e) Definitions and special rules
(1) Definitions
For purposes of this subsection—
(A) Tax credit bond
The term "tax credit bond" means—
(i) a qualified tax credit bond (as defined in section 54A(d)),1
(ii) a build America bond (as defined in section 54AA(d)) 1 other than a qualified bond described in section 54AA(g),1 and
(iii) any bond for which a credit is allowable under subpart H of part IV of subchapter A of this chapter.1
(B) Applicable date
The term "applicable date" means—
(i) in the case of a qualified tax credit bond or a bond described in subparagraph (A)(iii), any credit allowance date (as defined in section 54A(e)(1)),1 and
(ii) in the case of a build America bond (as defined in section 54AA(d)),1 any interest payment date (as defined in section 54AA(e)).1
(2) Stripped tax credit bonds
If the ownership of a tax credit bond is separated from the credit with respect to such bond, subsection (a) shall be applied by reference to the instruments evidencing the entitlement to the credit rather than the tax credit bond.
(f) Regulations, etc.
The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including methods for determining a shareholder's proportionate share of credits.
References in Text
Sections 54, 54A, and 54AA, referred to in subsecs. (a) and (e)(1), were repealed by Pub. L. 115–97, title I, §13404(a), Dec. 22, 2017, 131 Stat. 2138.
Section 1397E, referred to in subsec. (a), was repealed by Pub. L. 115–97, title I, §13404(c)(1), Dec. 22, 2017, 131 Stat. 2138.
Subpart H of part IV of subchapter A of this chapter, referred to in subsec. (e)(1)(A)(iii), is subpart H (§54) of part IV of subchapter A of chapter 1 of this title, which was repealed by Pub. L. 115–97, title I, §13404(a), Dec. 22, 2017, 131 Stat. 2138.
Amendments
2014—Subsec. (a). Pub. L. 113–295, §209(h)(2), in concluding provisions, substituted "with respect to some or all of the credits" for "with respect to credits" and inserted "(determined without regard to this section and sections 54(c), 54A(c)(1), 54AA(c)(1), and 1397E(c))" after "credits allowable".
Subsec. (a)(2). Pub. L. 113–295, §209(h)(1), inserted "(determined after the application of this section)" before comma at end.
Subsec. (b). Pub. L. 113–295, §209(h)(3), amended subsec. (b) generally. Prior to amendment, subsec. (b) consisted of pars. (1) to (3) relating to effects of elections under subsec. (a).
Subsec. (c). Pub. L. 113–295, §209(h)(4), amended subsec. (c) generally. The amendment was effective as if included in the provisions of the American Recovery and Reinvestment Tax Act of 2009 (Pub. L. 111–5, div. B, title I) to which it relates. As enacted by Pub. L. 111–5, §1541(a), subsec. (c) read as follows: "
"(1) credits described in subsection (a), and
"(2) gross income in respect of such credits,
shall not exceed the amounts so designated by the regulated investment company in a written notice mailed to its shareholders not later than 60 days after the close of its taxable year."
Subsec. (e)(1)(A)(ii). Pub. L. 113–295, §209(h)(5), inserted "other than a qualified bond described in section 54AA(g)" after "as defined in section 54AA(d))".
2010—Subsec. (c). Pub. L. 111–325, §301(d)(1), which directed substitution of "Statements" for "Notice" in heading and "so reported by the regulated investment company in a written statement furnished to such shareholder" for "so designated by the regulated investment company in a written notice mailed to its shareholders not later than 60 days after the close of its taxable year" in text, could not be executed to the text because the words "so reported by the regulated investment company in a written statement furnished to such shareholder" already appeared after the subsequent general amendment of subsec. (c) by Pub. L. 113–295 which was effective as if included in the provisions of the American Recovery and Reinvestment Tax Act of 2009 (Pub. L. 111–5, div. B, title I) to which it relates. However, the substitution was executed to the heading to reflect the probable intent of Congress. See 2014 Amendment note above and Effective Date of 2014 Amendment note below.
Subsec. (d). Pub. L. 111–325, §301(d)(2), struck out "and notifying shareholders" after "election" in heading and "and the notice to shareholders required by subsection (c)" after "subsection (a)" in text.
Effective Date of 2014 Amendment
Amendment by Pub. L. 113–295 effective as if included in the provisions of the American Recovery and Reinvestment Tax Act of 2009, Pub. L. 111–5, div. B, title I, to which such amendment relates, see section 209(k) of Pub. L. 113–295, set out as a note under section 24 of this title.
Effective Date of 2010 Amendment
Amendment by Pub. L. 111–325 applicable to taxable years beginning after Dec. 22, 2010, see section 301(h) of Pub. L. 111–325, set out as a note under section 852 of this title.
Effective Date
Pub. L. 111–5, div. B, title I, §1541(c), Feb. 17, 2009, 123 Stat. 362, provided that: "The amendments made by this section [enacting this section and amending sections 54 and 54A of this title] shall apply to taxable years ending after the date of the enactment of this Act [Feb. 17, 2009]."
1 See References in Text note below. 2 See 2010 Amendment note below.Tried the LawStack mobile app?
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