1 See Institute Memorandum to Accounting/Treasurers Members No. 15-94,
Closed-End Fund Committee No. 14-94 and Tax Members No. 25-94, dated June 10,
1994.
2 See Institute Memorandum to Accounting/Treasurers Members No. 18-94,
Closed-End Fund Committee No. 17-94 and Tax Members No. 28-94, dated June 21,
1994.
August 10, 1994
TO: ACCOUNTING/TREASURERS COMMITTEE NO. 43-94
TAX COMMITTEE NO. 26-94
RE: COMMENTS ON IRS RULING CONCERNING RIC INVESTMENTS IN
PARTNERSHIPS
__________________________________________________________
As we previously informed you, on June 10 the IRS issued
Revenue Ruling 94-40 regarding the application of the excise tax
minimum distribution rules of Internal Revenue Code section 4982
to a regulated investment company ("RIC") holding an interest in
a partnership1. The ruling, as modified by Revenue Ruling 94-
40A,2 provides that a RIC partner in a partnership must determine
its required distribution under section 4982 by taking into
account its share of partnership income, gain or loss as the
partnership recognizes these amounts.
Today, the Institute submitted the attached comments
regarding Revenue Ruling 94-40. The comments respond to
Announcement 94-84, which requested comments on the appropriate
scope of the application of Revenue Ruling 94-40.
The Institute's comments recommend that application of the
ruling generally be limited to so-called master-feeder
arrangements. The comments also urge that, to facilitate
compliance with the RIC distribution requirements, guidance
regarding the scope of the ruling's application be issued as
quickly as possible.
We will keep you informed of developments.
Peter J. Cinquegrani
Assistant Counsel - Tax
Attachments