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TITLE 26-INTERNAL REVENUE CODE (c) Notice to shareholders The amounts to be treated by the share- holder, for purposes of subsection (b)(2), as his proportionate share of- (1) taxes paid to any foreign country or pos- session of the United States, and (2) gross income derived from sources within any foreign country or possession of the United States, shall not exceed the amounts so designated by the company in a written notice mailed to its shareholders not later than 45 days after the close of its taxable year. (d) Manner of making election and notifying share- holders The election provided in subsection (a) and the notice to shareholders required by subsec- tion (c) shall be made in such manner as the Secretary may prescribe by regulations. (e) Cross references (1) For treatment by shareholders of taxes paid to for- eign countries and possessions of the United States, see section 164(a) and section 901. (2) For definition of foreign corporation, see section 7701(a)(5). (Aug. 16, 1954, ch. 736, 68A Stat. 272; Feb. 26, 1964, Pub. L. 88-272, title II, § 229(a)(3), 78 Stat. 99; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1906(b)(13)(A), 90 Stat. 1834.) AMENDMENTS 1976-Subsec. (d). Pub. L. 94-455 struck out "or his delegate" following "Secretary". 1964-Subsec. (c). Pub. L. 88-272 substituted "45 days" for "30 days". EFFECTIVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88-272 applicable to taxable years of regulated investment companies ending on or after Feb. 26, 1964, see section 229(c) of Pub. L. 88-272, set out as an Effective Date of 1969 Amendment note under section 852 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 855 of this title. § 854. Limitations applicable to dividends received from regulated investment company (a) Capital gain dividend For purposes of section 116 (relating to an ex- clusion for dividends received by individuals) and section 243 (relating to deductions for divi- dends received by corporations), a capital gain dividend (as defined in section 852(b)(3)) re- ceived from a regulated investment company shall not be considered as a dividend. (b) Other dividends (1) General rule In the case of a dividend received from a regulated investment company (other than a dividend to which subsection (a) applies)- (A) if such investment company meets the requirements ot section 852(a) for the tax- able year during which it paid such divi- dend; and (B) the aggregate dividends received by such company during such taxable year are less than 75 percent of its gross income, then, in computing the exclusion under sec- tion 116 and the deduction under section 243, there shall be taken into account only that portion of the dividend which bears the same ratio to the amount of such dividend as the aggregate dividends received by such compa- ny during such taxable year bear to its gross income for such taxable year. (2) Notice to shareholders The amount of any distribution by a regu- lated investment company which may be taken into account as a dividend for purposes of the exclusion under section 116 and the de- duction under section 243 shall not exceed the amount so designated by the company in a written notice to its shareholders mailed not later than 45 days after the close of its taxable year. (3) Definitions For purposes of this subsection- (A) The term "gross income" does not in- clude gain from the sale or other disposition of stock or securities. (B) The term "aggregate dividends re- ceived" includes only dividends received from domestic corporations other than divi- dends described in section 116(b) (relating to dividends excluded from gross income). In determining the amount of any dividend for purposes of this subparagraph, the rules provided in section 116(c) (relating to cer- tain distributions) shall apply. (Aug. 16, 1954, ch. 736, 68A Stat. 273; Feb. 26, 1964, Pub. L. 88-272, title II, H4 201(d)(8)-(10), 229(a)(4), 78 Stat. 32, 99.) AMENDMENTS 1964-Subsec. (a). Pub. L. 88-272, § 201(d)(8), deleted "section 34(a) (relating to credit for dividends received by individuals)," preceding "section 116". Subsec. (b). Pub. L. 88-272, §§201(d)(9), (10), 229(a)(4), substituted "45 days" for "30 days" in par. (2), and deleted "the credit under section 34(a)," pre- ceding "the exclusion" in par. (1), and "the credit under section 34," preceding "the exclusion" in pnr. (2). EFFECTIVE DATE OF 1964 AMENDMENT Amendment of subsecs. (a), (b)(1), (2) by Pub. L. 88- 272, applicable to dividends received after Dec. 31, 1964, in taxable years ending after such date, see sec- tion 201(e) of Pub. L. 88-272, set out as an Effective Date of 1964 Amendment note under section 37 of this title. Amendment of subsec. (b)(2) by Pub. L. 88-272 appli. cable to taxable years of regulated investment compa- nies ending on or after Feb. 26, 1964, see section 229(c) of Pub. L. 88-272, set out as an Effective Date of 1964 Amendment note under section 852 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 116, 243 of this title. § 855. Dividends paid by regulated investment compa- ny after close of taxable year (a) General rule For purposes of this chapter, if a regulated investment company- (1) declares a dividend prior to the time pre- scribed by law for the filing of its return for a taxable year (including the period of any ex- tension of time granted for filing such return), and § 854 Page 542