Subchapter M
E67392
Subchapter M is a section of the U.S. Internal Revenue Code that sets the tax rules and qualification requirements for regulated investment companies, including most mutual funds and ETFs.
Statements (47)
| Predicate | Object |
|---|---|
| instanceOf |
U.S. federal tax law provision
→
section of the U.S. Internal Revenue Code → |
| affects | tax reporting for mutual fund and ETF shareholders → |
| appliesTo |
ETFs
→
U.S.-registered investment companies seeking RIC status → closed-end funds → exchange-traded funds → investment companies registered under the Investment Company Act of 1940 that elect RIC treatment → mutual funds → open-end investment companies → regulated investment companies → |
| codifiedIn | Title 26 of the United States Code → |
| consequenceOfNonCompliance |
loss of regulated investment company tax status
→
taxation of the fund as a regular C corporation → |
| contains |
asset diversification tests for regulated investment companies
→
rules for capital gain distributions by regulated investment companies → rules for qualification as a regulated investment company → source-of-income tests for regulated investment companies → |
| distributionRequirement | regulated investment company must distribute at least 90% of its investment company taxable income → |
| governs |
tax character of distributions from regulated investment companies to shareholders
→
taxation of mutual fund income and gains at the fund level → treatment of interest, dividends, and capital gains earned by regulated investment companies → |
| influences |
structure of U.S. exchange-traded funds
→
structure of U.S. mutual funds → |
| interactsWith |
Subchapter C
→
surface form:
Subchapter C of the Internal Revenue Code
Subchapter K →
surface form:
Subchapter K of the Internal Revenue Code
Subchapter N of the Internal Revenue Code → |
| jurisdiction |
United States of America
→
surface form:
United States
|
| legalNature | federal statutory tax regime → |
| mainEffect | avoids double taxation at both fund and shareholder levels if requirements are met → |
| mainPurpose | to provide pass-through tax treatment for regulated investment companies → |
| objective | to align fund-level taxation with shareholder-level taxation → |
| partOf |
Internal Revenue Code
→
surface form:
Internal Revenue Code of 1986
|
| policyGoal | to encourage pooled investment vehicles by mitigating double taxation → |
| provides | deduction for dividends paid by regulated investment companies → |
| regulates |
qualification requirements for regulated investment companies
→
tax treatment of regulated investment companies → |
| relatedConcept |
RIC
→
dividends-paid deduction → pass-through taxation → regulated investment company → |
| requires |
compliance with specific distribution timing rules
→
maintenance of certain records for tax purposes by regulated investment companies → regulated investment companies to distribute most of their income to shareholders → regulated investment companies to meet income and asset diversification tests → |
| sector |
asset management industry
→
investment management industry → |