Section 17088.

(a) (1) Subchapter M of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to regulated investment companies and real estate investment trusts, shall apply, except as otherwise provided.

(2) Part 1 of Subchapter M of Chapter 1 of Subtitle A of the Internal Revenue Code, relating to regulated investment companies, as amended by the Regulated Investment Company Modernization Act of 2010 (Public Law 111-325), shall apply, except as otherwise provided.

(b) Section 17145 shall apply in lieu of Section 852(b)(5) of the Internal Revenue Code, relating to exempt-interest dividends.

(c) (1) Section 852(b)(3)(D) of the Internal Revenue Code, relating to treatment by shareholders of undistributed capital gains, shall not apply.

(2) Section 852(g)(1)(A) of the Internal Revenue Code is modified by substituting the phrase "subdivision (a) of Section 17145" for the phrase "the first sentence of subsection (b)(5)" contained therein.

(d) (1) Except as provided in paragraph (2), the amendments made to this section by the act adding this paragraph shall apply to taxable years beginning on or after December 23, 2010.

(2) (A) Section 851 of the Internal Revenue Code, relating to definition of regulated investment company, as amended by Section 201 of the Regulated Investment Company Modernization Act of 2010 (Public Law 111-325), and Section 852(b)(2)(G) of the Internal Revenue Code, as amended by Section 201 of the Regulated Investment Company Modernization Act of 2010 (Public Law 111-325), shall apply to taxable years with respect to which the due date (determined with regard to any extensions) of the return of tax for such taxable year is on or after December 23, 2010.

(B) Section 852(b)(4) of the Internal Revenue Code, relating to loss on sale or exchange of stock held six months or less, as amended by Section 309 of the Regulated Investment Company Modernization Act of 2010 (Public Law 111-325), shall apply to losses incurred on shares of stock for which the taxpayer's holding period begins on or after December 23, 2010.

(C) Section 852(f)(1)(C) of the Internal Revenue Code, as amended by Section 502 of the Regulated Investment Company Modernization Act of 2010 (Public Law 111-325), shall apply to charges incurred in taxable years beginning on or after December 23, 2010.

(D) Section 855(a) of the Internal Revenue Code, relating to general rule, as amended by Section 304 of the Regulated Investment Company Modernization Act of 2010 (Public Law 111-325), shall apply to distributions in taxable years beginning on or after December 23, 2010.

(Amended by Stats. 2011, Ch. 490, Sec. 1. Effective October 6, 2011.)