[Code of Federal Regulations]
[Title 26, Volume 9]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.852-12]

[Page 41-42]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.852-12  Non-RIC earnings and profits.

    (a) Applicability of section 852(a)(2)(A)--(1) In general. An 
investment company does not satisfy section 852(a)(2)(A) unless--
    (i) Part I of subchapter M applied to the company for all its 
taxable years ending on or after November 8, 1983; and
    (ii) For each corporation to whose earnings and profits the 
investment company succeeded by the operation of section 381, part I of 
subchapter M applied for all the corporation's taxable years ending on 
or after November 8, 1983.
    (2) Special rule. See section 1071(a)(5)(D) of the Tax Reform Act of 
1984, Public Law 98-369 (98 Stat. 1051), for a special rule which treats 
part I of subchapter M as having applied to an investment company's 
first taxable year ending after November 8, 1983.

[[Page 42]]

    (b) Applicability of section 852(a)(2)(B)--(1) In general. An 
investment company does not satisfy section 852(a)(2)(B) unless, as of 
the close of the taxable year, it has no earnings and profits other than 
earnings and profits that--
    (i) Were earned by a corporation in a year for which part I of 
subchapter M applied to the corporation and, at all times thereafter, 
were the earnings and profits of a corporation to which part I of 
subchapter M applied;
    (ii) By the operation of section 381 pursuant to a transaction that 
occurred before December 22, 1992, became the earnings and profits of a 
corporation to which part I of subchapter M applied and, at all times 
thereafter, were the earnings and profits of a corporation to which part 
I of subchapter M applied;
    (iii) Were accumulated in a taxable year ending before January 1, 
1984, by a corporation to which part I of subchapter M applied for any 
taxable year ending before November 8, 1983; or
    (iv) Were accumulated in the first taxable year of an investment 
company that began business in 1983 and that was not a successor 
corporation.
    (2) Prior law. For purposes of paragraph (b) of this section, a 
reference to part I of subchapter M includes a reference to the 
corresponding provisions of prior law.
    (c) Effective date. This regulation is effective for taxable years 
ending on or after December 22, 1992.
    (d) For treatment of net built-in gain assets of a C corporation 
that become assets of a RIC, see Sec. 1.337(d)-5T.

[T.D. 8483, 58 FR 43798, Aug. 18, 1993; 58 FR 49352, Sept. 22, 1993; 
T.D. 8872, 65 FR 5777, Feb. 7, 2000]