Treatment of nondeductible items
(A) Net capital loss
(A)Net capital loss#
If a regulated investment company has a net capital loss for any taxable year—
(i) such net capital loss shall not be taken into account for purposes of determining the company’s earnings and profits, and
(ii) any capital loss arising on the first day of the next taxable year by reason of clause (ii) or (iii) of section 1212(a)(3)(A) shall be treated as so arising for purposes of determining earnings and profits.
(A)(i)#
such net capital loss shall not be taken into account for purposes of determining the company’s earnings and profits, and
(A)(ii)#
any capital loss arising on the first day of the next taxable year by reason of clause (ii) or (iii) of section 1212(a)(3)(A) shall be treated as so arising for purposes of determining earnings and profits.
(B)Other nondeductible items#
(i) In general The earnings and profits of a regulated investment company for any taxable year (but not its accumulated earnings and profits) shall not be reduced by any amount which is not allowable as a deduction (other than by reason of section 265 or 171(a)(2)) in computing its taxable income for such taxable year.
(ii) Coordination with treatment of net capital losses Clause (i) shall not apply to a net capital loss to which subparagraph (A) applies.
(B)(i)In general#
The earnings and profits of a regulated investment company for any taxable year (but not its accumulated earnings and profits) shall not be reduced by any amount which is not allowable as a deduction (other than by reason of section 265 or 171(a)(2)) in computing its taxable income for such taxable year.
(B)(ii)Coordination with treatment of net capital losses#
Clause (i) shall not apply to a net capital loss to which subparagraph (A) applies.