Form 2438 Undistributed Capital Gains Tax Return

Form

2438

Undistributed Capital Gains Tax Return

OMB No. 1545-0144

(Rev. December 2008)
Department of the Treasury
Internal Revenue Service

For calendar year 20

©

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

or tax year beginning

, 20

, ending

, 20

Name of fund or REIT

Please
Type
or
Print
Part I

Employer identification number

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

2

3

Unused capital loss carryover (attach computation)

3

4

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

4

Part II

(

)

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

5

6

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

6

7

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

7

8

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

8

Part III 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)(D)
12 Amount of undistributed capital gains not designated under section
12
852(b)(3)(D) or 857(b)(3)(D). Subtract line 11 from line 10. (See instructions.)
13
14
15
16
17

9a
9b
10
11

13
14
15
16
17

Qualified timber gain included in the amount reported on line 11
Subtract line 13 from line 11
Multiply line 13 by 15% (.15)
Multiply line 14 by 35% (.35)
Capital gains tax. Add lines 15 and 16

Sign
Here

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.

©

Paid
Preparer’s
Use Only

Signature of officer
Preparer’s
signature

©

Firm’s name (or
yours if self-employed),
address, and ZIP code

Date
Date

©

For Privacy Act and Paperwork Reduction Act Notice, see instructions.

©

Title
Preparer’s SSN or PTIN

Check if
self-employed
EIN
Phone no.
Cat. No. 11856I

(

)
Form

2438

(Rev. 12-08)

Form 2438 (Rev. 12-2008)

General Instructions
Section references are to the
Internal Revenue Code.

What’s New
We added lines 13 through 17 in
Part III to compute the tax on
qualified timber gain at the reduced
15% rate.

Who Must File
Regulated investment companies
(RICs) and real estate investment
trusts (REITs) file Form 2438 if the
RIC (defined below) or REIT is
electing to designate undistributed
capital gains under section
852(b)(3)(D) or 857(b)(3)(D).
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)(D).
See the instructions for Schedule
D (Form 1120) for a definition of
capital assets and information on
figuring and reporting capital gains
and losses.

When To File
File Form 2438 by the 30th day after
the end of the RIC’s or the REIT’s
tax year.

Where To File
File the original form with the:
Internal Revenue Service Center
201 W. Rivercenter Blvd.
Covington, KY 41011
In addition, attach a copy of Form
2438 to Form 1120-RIC or Form
1120-REIT.

Who Must Sign
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.

Page

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’s
space should remain blank. Anyone
who prepares Form 2438 but does
not charge the RIC or REIT should
not sign the return. Generally,
anyone who is paid to prepare Form
2438 must sign it and fill in the Paid
Preparer’s Use Only area.
Paid preparer. The paid preparer
must complete the required preparer
information and:
● Sign the return in the space
provided for the preparer’s
signature.
● Give a copy of Form 2438 to the
taxpayer.

3

Depository Method of Tax
Payment
The two methods of depositing
corporate income taxes, including
the capital gains tax, are discussed
below.

Electronic Deposit Requirement
The RIC or REIT must make
electronic deposits of all depository
taxes (such as employment tax,
excise tax, and corporate income
tax) using the Electronic Federal Tax
Payment System (EFTPS) in 2009 if:
● The total deposits of such taxes in
2007 were more than $200,000 or
● The RIC or REIT was required to
use EFTPS in 2008.
If the RIC or REIT is required to
use EFTPS and fails to do so, it may
be subject to a 10% penalty. If the
RIC or REIT is not required to use
EFTPS, it may participate voluntarily.
For the requirements for using
EFTPS in subsequent years, see the
instructions for the RIC’s or REIT’s
income tax return for the applicable
year.
To enroll in or get more
information about EFTPS, call
1-800-555-4477. To enroll online,
visit www.eftps.gov.

Penalty for Late Filing of Return Depositing on time. For deposits
A RIC or REIT that does not file its
tax return by the due date, including
extensions, may be penalized 5% of
the unpaid tax for each month or
part of a 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 $135.
The penalty will not be imposed if
the RIC or REIT can show that the
failure to file on time was due to
reasonable cause. RICs or REITs
that file late must attach a statement
explaining the reasonable cause.

Penalty for Late Payment of Tax
A RIC or REIT that does not pay the
tax when due generally may 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 will not be imposed if
the RIC or REIT can show that the
failure to pay on time was due to
reasonable cause.

made by EFTPS to be on time, the
RIC or REIT must initiate the
transaction at least 1 business day
before the date the deposit is due.

Deposits With Form 8109
If the RIC or REIT does not use
EFTPS, deposit tax payments (and
estimated tax payments) with Form
8109, Federal Tax Deposit Coupon.
If you do not have a preprinted Form
8109, use Form 8109-B to make
deposits. You can get this form only
by calling 1-800-829-4933. Be sure
to have your employer identification
number (EIN) ready when you call.
Do not send deposits directly to
an IRS office; otherwise, the RIC or
REIT may have to pay a penalty.
Mail or deliver the completed Form
8109 with the payment to an
authorized depositary, (that is, a
commercial bank or other financial
institution authorized to accept
federal tax deposits). Make checks
or money orders payable to the
depositary.

Form 2438 (Rev. 12-2008)

To help ensure proper crediting,
enter the RIC’s or REIT’s EIN, the
tax period to which the deposit
applies, and “Form 1120-RIC” or
“Form 1120-REIT,” whichever
applies, on the check or money
order. Be sure to darken the “1120”
box under “Type of Tax” and the
appropriate “Quarter” box under
“Tax Period” on the coupon.
Records of these deposits will be
sent to the IRS. For more
information, see “Marking the Proper
Tax Period” in the instructions for
Form 8109.
For more information on deposits,
see the instructions in the coupon
booklet (Form 8109) and Pub. 583,
Starting a Business and Keeping
Records.
If the RIC or REIT owes tax when
it files Form 2438, do not include the
payment with the tax return. Instead,
mail or deliver the payment with
Form 8109 to an authorized
depositary, or use EFTPS.

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.

Lines 1 and 5
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.

Page

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.
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 on line 1 of Schedule D
(Form 1120) as “Net short-term
capital gain from line 4, Form 2438.”

Line 12
Enter the amount from line 12 on
line 6 of Schedule D (Form 1120) as
“Undistributed capital gains not
designated (from Form 2438).”

Line 13
For a definition of qualified timber
gain, see section 1201(b)(2).

Line 17
Deposit the tax due by the 30th day
after the end of the tax year.

4

Privacy Act and 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. Section 6109 requires return
preparers to provide their identifying
numbers on the return.
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 average time is:
Recordkeeping
8 hr., 36 min.
Learning about the
law or the form
30 min.
Preparing and sending
the form to the IRS
39 min.
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 write to the
Internal Revenue Service; Tax
Products Coordinating Committee;
SE:W:CAR:MP:T:T:SP; 1111
Constitution Ave., NW, IR-6526;
Washington, DC 20224.
Do not send the tax form to this
office. Instead, see Where To File.