2438 Undistributed Capital Gains Tax Return

2438

Undistributed Capital Gains Tax Return

Form
(Rev. January 2019)

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

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

Part I

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

(

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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

Paid
Preparer
Use Only

▲

▲

Sign
Here

9a
9b
10

Print/Type preparer’s name

Preparer’s signature

Date

Title
Check
if
self-employed

Firm’s name

▶

Firm’s EIN

Firm’s address

▶

Phone no.

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 11856I

PTIN

▶

Form 2438 (Rev. 1-2019)

Page 2

Form 2438 (Rev. 1-2019)

General Instructions

Who Must Sign

Section references are to the
Internal Revenue Code.

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.

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.

What’s New
Capital gains tax rate. For tax years
beginning after December 31, 2017,
the capital gains tax rate has been
reduced to 21% for RICs and REITs.

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.

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.

Penalty for Late Filing of
Return
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
$210. 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 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 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. 1-2019)

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.