PUBLIC LAW 100-647—NOV. 10, 1988
102 STAT. 3413
(B) Section 646(d)(3) of the Reform Act is amended by striking 26 USC 671 note, out "or by reason of subsection (e)". (1) AMENDMENTS RELATED TO SECTION 651 OF THE REFORM ACT.—
(I)(A) Paragraph (6) of section 852(b) of the 1986 Code (as added by section 651(b)(l)(A) of the Reform Act) is redesignated as paragraph (7). (B) Subsection (b) of section 855 of the 1986 Code is amended by striking out "section 852(b)(6)" and inserting in lieu thereof "section 852(b)(7)". (2) Paragraph (2) of section 4982(e) of the 1986 Code is amended to read as follows: "(2) CAPITAL GAIN NET INOOBIE.—
"(A) IN GENERAL.—Except as provided in subparagraph (B), the term 'capital gain net income' has the meaning given such term by section 1222(9) (determined by treating the 1-year period ending on October 31 of any calendar year as the company's taxable year). "(B)
REDUCTION BY NET ORDINARY LOSS FOR CALENDAR
YEAR.—The amount determined under subparagraph (A) shall be reduced (but not below the net capital gain) by the amount of the company's net ordinary loss for the calendar year. "(C) DEFINITIONS.—For purposes of this paragraph— "(i) NET CAPITAL GAIN.—The term 'net capital gain* has the meaning given such term by section 1222(11) (determined by treating the 1-year period ending on October 31 of the calendar year as the company's taxable year). "(ii) NET ORDINARY LOSS.—The net ordinary loss for the calendar year is the amount which woidd be the net operating loss of the company for the calendar year if the amount of such loss were determined in the same manner as ordinary income is determined under paragraph (1)." (3) Paragraph (2) of section 852(c) of the 1986 Code is amended to read as follows: "(2) CIOORDINATION WITH TAX ON UNDISTRIBUTED INCOME.—For
purposes of applying this chapter to distributions made by a regulated investment company with respect to any calendar year, the earnings and profits of such company shall be determined without r^ard to any net capital loss (or net foreign currency loss) attributable to transactions after October 31 of such year and with such other adjustments as the Secretary may by regulations prescribe. The preceding sentence shall apply— "(A) only to the extent that the amount distributed by the company with respect to the calendar year does not exceed the required distribution for such calendar year (as determined under section 4982 by substituting '100 percent' for each percentage set forth in section 4982(b)(l)), and "(B) except as provided in r^ulations, only if an election under section 4982(e)(4) is not in effect with respect to such company." (4) Subparagraph (C) of section 852(b)(3) of the 1986 Code is amended—
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