The Select Revenue Measures Subcommittee of the House Ways and Means Committee holds a hearing today on Tax Simplification Proposals Impacting Regulated Investment Companies:

H.R. 4337 was introduced late last year as the "Regulated Investment Company Modernization Act of 2009. As described by the Library of Congress, the bill would amend the Internal Revenue Code to: (1) permit RICs an unlimited carryforward of their net capital losses; (2) eliminate restrictions on the investment of RICs in commodities; (3) limit penalties for failure of RICs to satisfy gross income and asset tests; (4) modify rules for allocating RIC capital gain dividend distributions; (5) include certain nondeductible items of RIC income in earnings and profit calculations; (6) allow RICs that invest exclusively in the shares of other RICs to pass through to their shareholders tax-exempt interest and foreign tax credits, without regard to certain investment limitations; (7) modify rules relating to the declaration of RIC dividends, return of capital distributions, and stock redemptions; (8) allow certain RICs with shares that are redeemable upon demand to treat distributions in redemption of stock as an exchange of fund shares or a dividend for tax purposes; (9) allow a deferral of end-of-year losses of RICs; and (10) modify excise tax and penalty rules applicable to RICs.

WItnesses:

• Stephen D. Fisher (Senior VP & Deputy General Counsel, Fidelity Investments)
• William M. Paul (Attorney, Covington & Burling, Washington, D.C.)
• Joseph A. Riley (Attorney, Willkie Farr & Gallagher, New York)