Taxation And Regulated Investment Firms

by David Jenyns on September 17, 2008

Up to that time all investment firms other than open-end firms were subject to normal income taxes and surtaxes. Net realized profits also were taxable. First, the investment company paid taxes on 15 percent of its dividend income, 85 percent of dividend income being exempt as in the case of all other corporations.


Secondly, the investment company was subject to capital gains taxes. 5. It must distribute as taxable dividends not less than 90 percent of its net income, exclusive of capital gains, for any taxable year.

If a regulated investment company distributes to its shareholders as taxable dividends at least 90 percent of its net income, the amount so distributed is not subject to either the normal corporate tax or the surtax.

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