102 STAT. 3414
PUBLIC LAW 100-647—NOV. 10, 1988 (A) by striking out "net capital loss" each place it appears in the 3rd sentence and inserting in lieu thereof "net capital loss or net long-term capital loss", and (B) by striking out "regulated investment company taxable income" in the last sentence and inserting in lieu thereof "the taxable income of the regulated investment company". (5) Subsection (e) of section 4982 of the 1936 Code is amended by adding at the end thereof the following new paragraph: "(5)
TREATMENT OF FOREIGN CURRENCY GAINS AND LOSSES
AFTER OCTOBER 31 OF CALENDAR YEAR.—Any foreign Currency gain or loss which is attributable to a section 988 transaction and which is properly taken into account for the portion of the calendar year after October 31 shall not be taken into account in determining the amount of the ordinary income of the regulated investment compsmy for such calendar year but shall be taken into account in determining the ordinary income of the investment company for the following calendar year. In the case of any company making an election under paragraph (4), the preceding sentence shall be applied by substituting the last day of the company's taxable year for October 31." (6) Section 4982 of the 1986 Code is amended by adding at the end thereof the following new subsection: "(f)
EXCEPTION FOR CERTAIN REGULATED INVESTMENT COMPA-
NIES.—This section shall not apply to any regulated investment company for any calendar year if at all times during such calendar year each shareholder in such company was either— "(1) a trust described in section 401(a) and exempt from tax under section 501(a), or "(2) a s^regated asset account of a life insurance company held in connection with variable contracts (as defined in section 817(d)). For purposes of the preceding sentence, any shares attributable to an investment in the regulated investment company (not exceeding $250,000) made in connection with the organization of such company shall not be taken into account." (7) Subsection (b) of section 852 of the 1986 Code is amended by adding at the end thereof the following new paragraph: "(8) SPECIAL RULE FOR TREATMENT OF CERTAIN FOREIGN CURRENCY LOSSES.—To the extent provided in regulations, the tax-
able income of a regulated investment company (other than a company to which an election under section 4982(e)(4) applies) shall be computed without regard to any net foreign currency loss attributable to transactions after Ctetober 31 of such year, and any such net foreign currency loss shall be treated as arising on the 1st day of the following taxable year." (8) Subsection (a) of section 852 of the 1986 Code is amended by adding at the end thereof the following new sentence: "The Secretary may waive the requirements of paragraph (1) for any taxable year if the regulated investment company establishes to the satisfaction of the Secretary that it was unable to meet such requirements by reason of distributions previously made to meet the requirements of section 4982." (9) Effective with respect to dividends declared in 1988 and subsequent calendar years, paragraph (7) of section 852(b) of the 1986 Code (as redesignated by paragraph (1)) is amended—
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