[Code of Federal Regulations]
[Title 26, Volume 9]
[Revised as of April 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.852-1]

[Page 18]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec.  1.852-1  Taxation of regulated investment companies.

    (a) Requirements applicable thereto--(1) In general. Section 852(a) 
denies the application of the provisions of part I, subchapter M, 
chapter 1 of the Code (other than section 852(c), relating to earnings 
and profits), to a regulated investment company for a taxable year 
beginning after February 28, 1958, unless--
    (i) The deduction for dividends paid for such taxable year as 
defined in section 561 (computed without regard to capital gain 
dividends) is equal to at least 90 percent of its investment company 
taxable income for such taxable year (determined without regard to the 
provisions of section 852(b)(2)(D) and paragraph (d) of Sec.  1.852-3); 
and
    (ii) The company complies for such taxable year with the provisions 
of Sec.  1.852-6 (relating to records required to be maintained by a 
regulated investment company).

See section 853(b)(1)(B) and paragraph (a) of Sec.  1.853-2 for amounts 
to be added to the dividends paid deduction, and section 855 and Sec.  
1.855-1, relating to dividends paid after the close of the taxable year.
    (2) Special rule for taxable years of regulated investment companies 
beginning before March 1, 1958. The provisions of part I of subchapter M 
(including section 852(c)) are not applicable to a regulated investment 
company for a taxable year beginning before March 1, 1958, unless such 
company meets the requirements of section 852(a) and subparagraph (1) 
(i) and (ii) of this paragraph.
    (b) Failure to qualify. If a regulated investment company does not 
meet the requirements of section 852(a) and paragraph (a)(1) (i) and 
(ii) of this section for the taxable year, it will, even though it may 
otherwise be classified as a regulated investment company, be taxed in 
such year as an ordinary corporation and not as a regulated investment 
company. In such case, none of the provisions of part I of subchapter M 
(other than section 852(c) in the case of taxable years beginning after 
February 28, 1958) will be applicable to it. For the rules relating to 
the applicability of section 852(c), see Sec.  1.852-5.

[T.D. 6598, 27 FR 4091, Apr. 28, 1962]