[12933]
December 15, 2000
TO: TAX MEMBERS No. 37-00
TRANSFER AGENT ADVISORY COMMITTEE No. 65-00
ACCOUNTING/TREASURERS COMMITTEE No. 44-00
RE: REVISED IRS FORMS FURTHER CLARIFY QUALIFIED 5-YEAR GAIN RULES
As we previously informed you, the Internal Revenue Service (“IRS”) recently released
guidance, requested by the Institute, regarding implementation by regulated investment
companies (“RICs”) and their shareholders of the new “qualified 5-year gain” rules that become
effective after December 31, 2000.1 Following issuance of this guidance, which stated that the
mark-to-market election could be made for “an asset,” the Institute requested a further
clarification to confirm that the election may be made on a security-lot-by-security-lot basis.
We are pleased to inform you that the attached instructions to the IRS Form 1120
Schedule D2 expressly state that RICs may “[m]ake the election on a share-by-share or asset-by-
asset basis.” The instructions also contain additional guidance on the manner in which a RIC
may elect, on an original or amended return, to recognize gain on assets held on January 1,
2001.
Keith Lawson
Senior Counsel
Attachments
Note: Not all recipients receive the attachments. To obtain copies of the attachments to which this memo refers,
please call the ICI Library at (202) 326-8304 and request the attachments for memo 12933. ICI Members may retrieve
this memo and its attachments from ICINet (http://members.ici.org).
Attachment no. 1 (in .pdf format)
1 See Institute Memorandum to Tax Members No. 33-00, Transfer Agent Advisory Committee No. 57-00 and
Accounting/Treasurers Committee No. 41-00, dated November 3, 2000.
2 Also attached are the 2000 IRS Form Schedule D, the 2000 IRS Form 1120-RIC and the accompanying instructions.