Certain distributions
In the case of a distribution to which section 897 does not apply by reason of the second sentence of section 897(h)(1), the amount of such distribution which would be included in computing long-term capital gains for the shareholder under subparagraph (B) or (D) (without regard to this subparagraph)—
(i)#
shall not be included in computing such shareholder’s long-term capital gains, and
(ii)#
shall be included in such shareholder’s gross income as a dividend from the regulated investment company.