Undistributed Capital Gains Tax Return

2438

Undistributed Capital Gains Tax Return

Form

(Rev. December 2020)

Department of the Treasury

Internal Revenue Service

For calendar year 20

or tax year beginning

, 20

, ending

, 20

Employer identification number

Name of fund or REIT

Please

Type

or

Print

Part I

OMB No. 1545-0123

▶ Attach a copy of this form to Form 1120-RIC or to Form 1120-REIT.

▶ Go to www.irs.gov/Form2438 for instructions and the latest information.

Number, street, and room or suite no. (If a P.O. box, see instructions.)

City or town, state, and ZIP code

Short-Term Capital Gains and Losses—Assets Held One Year or Less

(a) Description of property

(Example, 100 shares of Z Co.)

(b) Date acquired

(mo., day, yr.)

(c) Date sold

(mo., day, yr.)

(e) Cost or

other basis

(see instructions)

(d) Sales price

(see instructions)

(f) Gain or (loss)

((d) less (e))

1

2

Short-term capital gain from installment sales from Form 6252, line 26 or 37 .

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2

3

Unused capital loss carryover (attach computation) .

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3

4

Net short-term capital gain or (loss). Combine lines 1 through 3. See instructions .

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4

Part II

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Long-Term Capital Gains and Losses—Assets Held More Than One Year

(

)

5

6

Gain from Form 4797, column (g), line 7 or 9

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6

7

Long-term capital gain from installment sales from Form 6252, line 26 or 37 .

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7

8

Net long-term capital gain. Combine lines 5 through 7 .

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8

Part III

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Summary of Parts I and II

9a

Net capital gain. Enter excess of net long-term capital gain (line 8) over net short-term capital loss

(line 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

b Capital gain dividends

. . . . . . . . . . . . . . . . . . . . . . . . .

10

Undistributed capital gains. Subtract line 9b from line 9a . . . . . . . . . . . . . .

11

Amount of undistributed capital gains on line 10 designated under section 852(b)(3)(D) or

857(b)(3)(C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12

Amount of undistributed capital gains not designated under section 852(b)

(3)(D) or 857(b)(3)(C). Subtract line 11 from line 10. See instructions . . .

12

13

Capital gains tax. Multiply line 11 by 21% (0.21) . . . . . . . . . . . . . . . . .

11

13

Under penalties of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true,

correct, and complete. Declaration of preparer (other than taxpayer) is based on all information of which preparer has any knowledge.

Date

Signature of officer

Print/Type preparer’s name

Paid

Preparer

Use Only Firm’s name

Firm’s address

▲

▲

Sign

Here

9a

9b

10

Preparer’s signature

Date

Check

if

self-employed

PTIN

Firm’s EIN ▶

▶

Phone no.

▶

For Paperwork Reduction Act Notice, see instructions.

Title

Cat. No. 11856I

Form 2438 (Rev. 12-2020)

Page 2

Form 2438 (Rev. 12-2020)

General Instructions

Who Must Sign

Section references are to the

Internal Revenue Code.

When To File

Form 2438 must be signed and

dated by:

• The president, vice president,

treasurer, assistant treasurer, chief

accounting officer; or

• Any other corporate officer (such

as tax officer) authorized to sign.

If a return is filed on behalf of a RIC

or REIT by a receiver, trustee, or

assignee, the fiduciary must sign the

return, instead of the corporate

officer. Returns and forms signed by a

receiver or trustee in bankruptcy on

behalf of a RIC or REIT must be

accompanied by a copy of the order

or instructions of the court authorizing

signing of the return or form.

For a return that is being filed for a

series fund (discussed in section

851(g)), the return may be signed by

any officer authorized to sign for the

RIC in which the fund is a series.

If a corporate officer completes

Form 2438, the paid preparer space

should remain blank. Anyone who

prepares Form 2438 but doesn’t

charge the RIC or REIT shouldn’t

sign the return. Generally, anyone

who is paid to prepare Form 2438

must sign it and fill in the Paid

Preparer Use Only area.

Paid preparer. The paid preparer

must complete the Paid Preparer

Use Only area (including signing the

form in the space provided for the

preparer’s signature) and give a

copy of Form 2438 to the taxpayer.

File Form 2438 by the 30th day after

the end of the RIC’s or the REIT’s

tax year.

Penalty for Late Filing of

Return

Future Developments

For the latest information about

developments related to Form 2438

and its instructions, such as legislation

enacted after they were published, go

to www.irs.gov/Form2438.

Who Must File

Regulated investment companies

(RICs) and real estate investment

trusts (REITs) file Form 2438 if the

RIC or REIT is electing to designate

undistributed capital gains under

section 852(b)(3)(D) or 857(b)(3)(C).

If a RIC has more than one fund,

each fund must file a separate Form

2438. The term “fund” as used in

these instructions refers to the

definition in section 851(g) and to

any RIC that does not have more

than one portfolio of assets.

Purpose of Form

Form 2438 is used by RICs or REITs

to figure income tax on undistributed

capital gains designated under

section 852(b)(3)(D) or section

857(b)(3)(C).

See the instructions for Schedule

D (Form 1120) and Form 8949 for a

definition of capital assets and

information on figuring and reporting

capital gains and losses.

Where To File

File the original form with the:

Department of the Treasury

Internal Revenue Service Center

Kansas City, MO 64999

In addition, attach a copy of Form

2438 to Form 1120-RIC or Form

1120-REIT.

A RIC or REIT that doesn’t file its tax

return by the due date, including

extensions, may be penalized 5% of

the unpaid tax for each month or

part of the month the return is late,

up to a maximum of 25% of the

unpaid tax. The minimum penalty for

a return that is more than 60 days

late is the smaller of the tax due or

$435. The penalty won’t be imposed

if the RIC or REIT can show that the

failure to file on time was due to

reasonable cause.

Note: The minimum penalty amount

may be adjusted for inflation. See

the instructions for your applicable

income tax return for the minimum

penalty amount for the current tax

year.

Penalty for Late Payment of

Tax

A RIC or REIT that doesn’t pay the

tax when due may generally be

penalized 1/2 of 1% of the unpaid tax

for each month or part of a month

the tax is not paid, up to a maximum

of 25% of the unpaid tax. The

penalty won’t be imposed if the RIC

or REIT can show that the failure to

pay on time was due to reasonable

cause.

Reasonable cause determinations.

If the RIC or REIT receives a notice

about penalties after it files its return,

send the IRS an explanation and we

will determine if the RIC or REIT

meets the reasonable cause criteria.

Do not attach an explanation when

the RIC’s or REIT’s return is filed.

Electronic Deposit

Requirement

RICs and REITs must use electronic

funds transfers to make all federal

tax deposits (such as deposits of

employment tax, excise tax, and

corporate income tax). Generally,

electronic fund transfers are made

using the Electronic Federal Tax

Payment System (EFTPS). However,

if you don’t want to use EFTPS, you

can arrange for your tax

professional, financial institution,

payroll service, or other trusted third

party to make deposits on your

behalf. Also, you may arrange for

your financial institution to submit a

same-day tax wire payment

(discussed below) on your behalf.

EFTPS is a free service provided by

the Department of the Treasury.

Services provided by your tax

professional, financial institution,

payroll service, or other third party

may have a fee.

For more information about

EFTPS, or to enroll in EFTPS, visit

the EFTPS website at

www.eftps.gov or call

1-800-555-4477 (TTY/TDD

1-800-733-4829).

Depositing on time. For any deposit

made by EFTPS to be on time, the

RIC or REIT must submit the deposit

by 8 p.m. Eastern time on the day

before the date the deposit is due. If

the RIC or REIT uses a third party to

make the deposits on its behalf, they

may have different cutoff times.

Page 3

Form 2438 (Rev. 12-2020)

Same-day wire payment option. If

the RIC or REIT fails to submit a

deposit transaction on EFTPS by

8 p.m. Eastern time the day before

the date a deposit is due, it can still

make the deposit on time by using

the Federal Tax Collection Service

(FTCS). To use the same-day wire

payment method, the RIC or REIT

will need to make arrangements with

its financial institution ahead of time

regarding availability, deadlines, and

costs. Financial institutions may

charge a fee for payments made this

way. To learn more about the

information the RIC or REIT will need

to provide to its financial institution

to make a same-day wire payment,

visit the IRS website at www.irs.gov/

SameDayWire.

Specific Instructions

Period covered. Fill in the tax year

space at the top of the form.

Address. Include the suite, room, or

other unit number after the street

address. If the Post Office does not

deliver mail to the street address

and the RIC or REIT has a P.O. box,

show the box number instead of the

street address.

Column (b)—Date acquired. A

RIC’s or REIT’s acquisition date for

an asset it held on January 1, 2001,

for which it made an election to

recognize any gain (under section

311 of the Taxpayer Relief Act of

1997) is the date of the deemed sale

and reacquisition.

Column (d). Enter either gross sales

price or net sales price. If net sales

price is entered, do not increase the

cost or other basis in column (e) by

any expenses reflected in the net

sales price.

Lines 1 and 5

Column (e). If gross sales price is

reported in column (d), increase the

cost or other basis by any expense

of sale such as broker’s fees,

commissions, or option premiums

before entering an amount in

column (e).

A RIC’s or REIT’s basis in an asset

it held on January 1, 2001, for which

the RIC or REIT made an election to

recognize any gain (under section

311 of the Taxpayer Relief Act of

1997) is the asset’s closing market

price or fair market value, whichever

applies, on the date of the deemed

sale and reacquisition, whether the

deemed sale resulted in a gain or

unallowed loss.

Line 4

Enter any net short-term capital gain

from line 4 in Part I of Form 8949.

Also identify the gain as “Net shortterm capital gain from line 4, Form

2438” in column (a) of Form 8949.

See Form 8949, Schedule D (Form

1120), and the related instructions

for details.

Line 12

Enter the amount from line 12 in

Part II of Form 8949. Also identify

the gain as “Undistributed capital

gains not designated (from Form

2438)” in column (a) of Form 8949.

See Form 8949, Schedule D (Form

1120), and the related instructions

for details.

Line 13

Deposit the tax due by the 30th day

after the end of the tax year.

Paperwork Reduction Act Notice.

We ask for the information on this

form to carry out the Internal

Revenue laws of the United States.

You are required to give us the

information. We need it to ensure

that you are complying with these

laws and to allow us to figure and

collect the right amount of tax.

You are not required to provide

the information requested on a form

that is subject to the Paperwork

Reduction Act unless the form

displays a valid OMB control

number. Books or records relating to

a form or its instructions must be

retained as long as their contents

may become material in the

administration of any Internal

Revenue law. Generally, tax returns

and return information are

confidential, as required by section

6103.

The time needed to complete and

file this form will vary depending on

individual circumstances. The

estimated burden for business

taxpayers filing this form is approved

under OMB control number

1545-0123 and is included in the

estimates shown in the instructions

for their business income tax return.

If you have comments concerning

the accuracy of these time estimates

or suggestions for making this form

simpler, we would be happy to hear

from you. You can send us

comments from www.irs.gov/

FormComments. Or you can write to

the Internal Revenue Service, Tax

Forms and Publications Division,

1111 Constitution Ave. NW, IR-6526,

Washington, DC 20224.

Do not send the tax form to this

office. Instead, see Where To File,

earlier.