
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC851]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
Subchapter M--Regulated Investment Companies and Real Estate Investment 
                                 Trusts
 
                 PART I--REGULATED INVESTMENT COMPANIES
 
Sec. 851. Definition of regulated investment company


(a) General rule

    For purposes of this subtitle, the term ``regulated investment 
company'' means any domestic corporation--
        (1) which, at all times during the taxable year--
            (A) is registered under the Investment Company Act of 1940, 
        as amended (15 U.S.C. 80a-1 to 80b-2) as a management company or 
        unit investment trust, or
            (B) has in effect an election under such Act to be treated 
        as a business development company, or

        (2) which is a common trust fund or similar fund excluded by 
    section 3(c)(3) of such Act (15 U.S.C. 80a-3(c)) from the definition 
    of ``investment company'' and is not included in the definition of 
    ``common trust fund'' by section 584(a).

(b) Limitations

    A corporation shall not be considered a regulated investment company 
for any taxable year unless--
        (1) it files with its return for the taxable year an election to 
    be a regulated investment company or has made such election for a 
    previous taxable year;
        (2) at least 90 percent of its gross income is derived from 
    dividends, interest, payments with respect to securities loans (as 
    defined in section 512(a)(5)), and gains from the sale or other 
    disposition of stock or securities (as defined in section 2(a)(36) 
    of the Investment Company Act of 1940, as amended) or foreign 
    currencies, or other income (including but not limited to gains from 
    options, futures, or forward contracts) derived with respect to its 
    business of investing in such stock, securities, or currencies; and
        (3) at the close of each quarter of the taxable year--
            (A) at least 50 percent of the value of its total assets is 
        represented by--
                (i) cash and cash items (including receivables), 
            Government securities and securities of other regulated 
            investment companies, and
                (ii) other securities for purposes of this calculation 
            limited, except and to the extent provided in subsection 
            (e), in respect of any one issuer to an amount not greater 
            in value than 5 percent of the value of the total assets of 
            the taxpayer and to not more than 10 percent of the 
            outstanding voting securities of such issuer, and

            (B) not more than 25 percent of the value of its total 
        assets is invested in the securities (other than Government 
        securities or the securities of other regulated investment 
        companies) of any one issuer, or of two or more issuers which 
        the taxpayer controls and which are determined, under 
        regulations prescribed by the Secretary, to be engaged in the 
        same or similar trades or businesses or related trades or 
        businesses.

For purposes of paragraph (2), there shall be treated as dividends 
amounts included in gross income under section 951(a)(1)(A)(i) or 
1293(a) for the taxable year to the extent that, under section 959(a)(1) 
or 1293(c) (as the case may be), there is a distribution out of the 
earnings and profits of the taxable year which are attributable to the 
amounts so included. For purposes of paragraph (2), the Secretary may by 
regulation exclude from qualifying income foreign currency gains which 
are not directly related to the company's principal business of 
investing in stock or securities (or options and futures with respect to 
stock or securities). For purposes of paragraph (2), amounts excludable 
from gross income under section 103(a) shall be treated as included in 
gross income. Income derived from a partnership or trust shall be 
treated as described in paragraph (2) only to the extent such income is 
attributable to items of income of the partnership or trust (as the case 
may be) which would be described in paragraph (2) if realized by the 
regulated investment company in the same manner as realized by the 
partnership or trust.

(c) Rules applicable to subsection (b)(3)

    For purposes of subsection (b)(3) and this subsection--
        (1) In ascertaining the value of the taxpayer's investment in 
    the securities of an issuer, for the purposes of subparagraph (B), 
    there shall be included its proper proportion of the investment of 
    any other corporation, a member of a controlled group, in the 
    securities of such issuer, as determined under regulations 
    prescribed by the Secretary.
        (2) The term ``controls'' means the ownership in a corporation 
    of 20 percent or more of the total combined voting power of all 
    classes of stock entitled to vote.
        (3) The term ``controlled group'' means one or more chains of 
    corporations connected through stock ownership with the taxpayer 
    if--
            (A) 20 percent or more of the total combined voting power of 
        all classes of stock entitled to vote of each of the 
        corporations (except the taxpayer) is owned directly by one or 
        more of the other corporations, and
            (B) the taxpayer owns directly 20 percent or more of the 
        total combined voting power of all classes of stock entitled to 
        vote, of at least one of the other corporations.

        (4) The term ``value'' means, with respect to securities (other 
    than those of majority-owned subsidiaries) for which market 
    quotations are readily available, the market value of such 
    securities; and with respect to other securities and assets, fair 
    value as determined in good faith by the board of directors, except 
    that in the case of securities of majority-owned subsidiaries which 
    are investment companies such fair value shall not exceed market 
    value or asset value, whichever is higher.
        (5) All other terms shall have the same meaning as when used in 
    the Investment Company Act of 1940, as amended.

(d) Determination of status

    A corporation which meets the requirements of subsections (b)(3) and 
(c) at the close of any quarter shall not lose its status as a regulated 
investment company because of a discrepancy during a subsequent quarter 
between the value of its various investments and such requirements 
unless such discrepancy exists immediately after the acquisition of any 
security or other property and is wholly or partly the result of such 
acquisition. A corporation which does not meet such requirements at the 
close of any quarter by reason of a discrepancy existing immediately 
after the acquisition of any security or other property which is wholly 
or partly the result of such acquisition during such quarter shall not 
lose its status for such quarter as a regulated investment company if 
such discrepancy is eliminated within 30 days after the close of such 
quarter and in such cases it shall be considered to have met such 
requirements at the close of such quarter for purposes of applying the 
preceding sentence.

(e) Investment companies furnishing capital to development corporations

                          (1) General rule

        If the Securities and Exchange Commission determines, in 
    accordance with regulations issued by it, and certifies to the 
    Secretary not earlier than 60 days prior to the close of the taxable 
    year of a management company or a business development company 
    described in subsection (a)(1), that such investment company is 
    principally engaged in the furnishing of capital to other 
    corporations which are principally engaged in the development or 
    exploitation of inventions, technological improvements, new 
    processes, or products not previously generally available, such 
    investment company may, in the computation of 50 percent of the 
    value of its assets under subparagraph (A) of subsection (b)(3) for 
    any quarter of such taxable year, include the value of any 
    securities of an issuer, whether or not the investment company owns 
    more than 10 percent of the outstanding voting securities of such 
    issuer, the basis of which, when added to the basis of the 
    investment company for securities of such issuer previously 
    acquired, did not exceed 5 percent of the value of the total assets 
    of the investment company at the time of the subsequent acquisition 
    of securities. The preceding sentence shall not apply to the 
    securities of an issuer if the investment company has continuously 
    held any security of such issuer (or of any predecessor company of 
    such issuer as determined under regulations prescribed by the 
    Secretary) for 10 or more years preceding such quarter of such 
    taxable year.

                           (2) Limitation

        The provisions of this subsection shall not apply at the close 
    of any quarter of a taxable year to an investment company if at the 
    close of such quarter more than 25 percent of the value of its total 
    assets is represented by securities of issuers with respect to each 
    of which the investment company holds more than 10 percent of the 
    outstanding voting securities of such issuer and in respect of each 
    of which or any predecessor thereof the investment company has 
    continuously held any security for 10 or more years preceding such 
    quarter unless the value of its total assets so represented is 
    reduced to 25 percent or less within 30 days after the close of such 
    quarter.

                     (3) Determination of status

        For purposes of this subsection, unless the Securities and 
    Exchange Commission determines otherwise, a corporation shall be 
    considered to be principally engaged in the development or 
    exploitation of inventions, technological improvements, new 
    processes, or products not previously generally available, for at 
    least 10 years after the date of the first acquisition of any 
    security in such corporation or any predecessor thereof by such 
    investment company if at the date of such acquisition the 
    corporation or its predecessor was principally so engaged, and an 
    investment company shall be considered at any date to be furnishing 
    capital to any company whose securities it holds if within 10 years 
    prior to such date it has acquired any of such securities, or any 
    securities surrendered in exchange therefor, from such other company 
    or predecessor thereof. For purposes of the certification under this 
    subsection, the Securities and Exchange Commission shall have 
    authority to issue such rules, regulations and orders, and to 
    conduct such investigations and hearings, either public or private, 
    as it may deem appropriate.

                           (4) Definitions

        The terms used in this subsection shall have the same meaning as 
    in subsections (b)(3) and (c) of this section.

(f) Certain unit investment trusts

    For purposes of this title--
        (1) A unit investment trust (as defined in the Investment 
    Company Act of 1940)--
            (A) which is registered under such Act and issues periodic 
        payment plan certificates (as defined in such Act) in one or 
        more series,
            (B) substantially all of the assets of which, as to all such 
        series, consist of (i) securities issued by a single management 
        company (as defined in such Act) and securities acquired 
        pursuant to subparagraph (C), or (ii) securities issued by a 
        single other corporation, and
            (C) which has no power to invest in any other securities 
        except securities issued by a single other management company, 
        when permitted by such Act or the rules and regulations of the 
        Securities and Exchange Commission,

    shall not be treated as a person.
        (2) In the case of a unit investment trust described in 
    paragraph (1)--
            (A) each holder of an interest in such trust shall, to the 
        extent of such interest, be treated as owning a proportionate 
        share of the assets of such trust;
            (B) the basis of the assets of such trust which are treated 
        under subparagraph (A) as being owned by a holder of an interest 
        in such trust shall be the same as the basis of his interest in 
        such trust; and
            (C) in determining the period for which the holder of an 
        interest in such trust has held the assets of the trust which 
        are treated under subparagraph (A) as being owned by him, there 
        shall be included the period for which such holder has held his 
        interest in such trust.

This subsection shall not apply in the case of a unit investment trust 
which is a segregated asset account under the insurance laws or 
regulations of a State.

(g) Special rule for series funds

                           (1) In general

        In the case of a regulated investment company (within the 
    meaning of subsection (a)) having more than one fund, each fund of 
    such regulated investment company shall be treated as a separate 
    corporation for purposes of this title (except with respect to the 
    definitional requirement of subsection (a)).

                          (2) Fund defined

        For purposes of paragraph (1) the term ``fund'' means a 
    segregated portfolio of assets, the beneficial interests in which 
    are owned by the holders of a class or series of stock of the 
    regulated investment company that is preferred over all other 
    classes or series in respect of such portfolio of assets.

(Aug. 16, 1954, ch. 736, 68A Stat. 268; Pub. L. 85-866, title I, 
Sec. 38, Sept. 2, 1958, 72 Stat. 1638; Pub. L. 91-172, title IX, 
Sec. 908(a), Dec. 30, 1969, 83 Stat. 717; Pub. L. 94-12, title VI, 
Sec. 602(a)(2), Mar. 29, 1975, 89 Stat. 58; Pub. L. 94-455, title XIX, 
Secs. 1901(a)(109), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1783, 1834; 
Pub. L. 95-345, Sec. 2(a)(3), Aug. 15, 1978, 92 Stat. 481; Pub. L. 95-
600, title VII, Sec. 701(s)(1), Nov. 6, 1978, 92 Stat. 2911; Pub. L. 97-
424, title V, Sec. 547(b)(1), Jan. 6, 1983, 96 Stat. 2199; Pub. L. 98-
369, div. A, title X, Sec. 1071(a)(1), July 18, 1984, 98 Stat. 1049; 
Pub. L. 99-514, title VI, Secs. 652(a), (b), 653(a)-(c), 654(a), title 
XII, Sec. 1235(f)(3), Oct. 22, 1986, 100 Stat. 2297, 2298, 2575; Pub. L. 
100-647, title I, Sec. 1006(m), (n)(1), (2)(A), (B), (4), (5), (o), Nov. 
10, 1988, 102 Stat. 3415, 3416; Pub. L. 105-34, title XII, Sec. 1271(a)-
(b)(7), Aug. 5, 1997, 111 Stat. 1036, 1037.)

                       References in Text

    The Investment Company Act of 1940, as amended, referred to in 
subsecs. (a)(1), (b)(2), (c)(5), and (f)(1), is title I of act Aug. 22, 
1940, ch. 686, 54 Stat. 789, as amended, which is classified generally 
to subchapter I (Sec. 80a-1 et seq.) of chapter 2D of Title 15, Commerce 
and Trade. Section 2(a)(36) of the Act is classified to section 80a-
2(a)(36) of Title 15. For complete classification of this Act to the 
Code, see section 80a-51 of Title 15 and Tables.


                               Amendments

    1997--Subsec. (b). Pub. L. 105-34, Sec. 1271(b)(1), in concluding 
provisions, substituted ``paragraph (2), amounts excludable'' for 
``paragraphs (2) and (3), amounts excludable'' and struck out ``In the 
case of the taxable year in which a regulated investment company is 
completely liquidated, there shall not be taken into account under 
paragraph (3) any gain from the sale, exchange, or distribution of any 
property after the adoption of the plan of complete liquidation.'' at 
end.
    Subsec. (b)(2). Pub. L. 105-34, Sec. 1271(a), inserted ``and'' at 
end.
    Subsec. (b)(3), (4). Pub. L. 105-34, Sec. 1271(a), redesignated par. 
(4) as (3) and struck out former par. (3) which read as follows: ``less 
than 30 percent of its gross income is derived from the sale or 
disposition of any of the following which was held for less than 3 
months:
        ``(A) stock or securities (as defined in section 2(a)(36) of the 
    Investment Company Act of 1940, as amended),
        ``(B) options, futures, or forward contracts (other than 
    options, futures, or forward contracts on foreign currencies), or
        ``(C) foreign currencies (or options, futures, or forward 
    contracts on foreign currencies) but only if such currencies (or 
    options, futures, or forward contracts) are not directly related to 
    the company's principal business of investing in stock or securities 
    (or options and futures with respect to stocks or securities), 
    and''.
    Subsec. (c). Pub. L. 105-34, Sec. 1271(b)(2), substituted 
``subsection (b)(3)'' for ``subsection (b)(4)'' in heading and 
introductory provisions.
    Subsec. (d). Pub. L. 105-34, Sec. 1271(b)(3), substituted 
``subsections (b)(3)'' for ``subsections (b)(4)''.
    Subsec. (e)(1). Pub. L. 105-34, Sec. 1271(b)(4), substituted 
``subsection (b)(3)'' for ``subsection (b)(4)''.
    Subsec. (e)(4). Pub. L. 105-34, Sec. 1271(b)(5), substituted 
``subsections (b)(3)'' for ``subsections (b)(4)''.
    Subsec. (g). Pub. L. 105-34, Sec. 1271(b)(6), redesignated subsec. 
(h) as (g) and struck out former subsec. (g) which provided for 
treatment of certain hedging transactions.
    Subsec. (g)(3). Pub. L. 105-34, Sec. 1271(b)(7), struck out par. (3) 
which provided special rule for abnormal redemptions.
    Subsec. (h). Pub. L. 105-34, Sec. 1271(b)(6), redesignated subsec. 
(h) as (g).
    1988--Subsec. (a)(1). Pub. L. 100-647, Sec. 1006(m)(1), amended par. 
(1) generally. Prior to amendment, par. (1) read as follows: ``which, at 
all times during the taxable year, is registered under the Investment 
Company Act of 1940, as amended (15 U.S.C. 80a-1 to 80b-2), as a 
management company, business development company, or unit investment 
trust, or''.
    Subsec. (b). Pub. L. 100-647, Sec. 1006(n)(1), (5), inserted at end 
``Income derived from a partnership or trust shall be treated as 
described in paragraph (2) only to the extent such income is 
attributable to items of income of the partnership or trust (as the case 
may be) which would be described in paragraph (2) if realized by the 
regulated investment company in the same manner as realized by the 
partnership or trust. In the case of the taxable year in which a 
regulated investment company is completely liquidated, there shall not 
be taken into account under paragraph (3) any gain from the sale, 
exchange, or distribution of any property after the adoption of the plan 
of complete liquidation.''
    Pub. L. 100-647, Sec. 1006(n)(2)(B), substituted ``which are not 
directly related'' for ``which are not ancillary'' in last sentence.
    Subsec. (b)(3). Pub. L. 100-647, Sec. 1006(n)(2)(A), amended par. 
(3) generally. Prior to amendment, par. (3) read as follows: ``less than 
30 percent of its gross income is derived from the sale or other 
disposition of stock or securities held for less than 3 months; and''.
    Subsec. (e)(1). Pub. L. 100-647, Sec. 1006(m)(2), substituted ``a 
management company or a business development company described in 
subsection (a)(1)'' for ``a registered management company or registered 
business development company''.
    Subsec. (g)(2)(A)(i). Pub. L. 100-647, Sec. 1006(n)(4), substituted 
``contractual obligation'' for ``contractual option''.
    Subsec. (h). Pub. L. 100-647, Sec. 1006(o)(1), redesignated subsec. 
(q) as (h).
    Subsec. (h)(3). Pub. L. 100-647, Sec. 1006(o)(2), added par. (3).
    Subsec. (q). Pub. L. 100-647, Sec. 1006(o)(1), redesignated subsec. 
(q) as (h).
    1986--Subsec. (a)(1). Pub. L. 99-514, Sec. 652(a), substituted ``as 
a management company, business development company, or unit investment 
trust'' for ``either as a management company or as a unit investment 
trust''.
    Subsec. (b). Pub. L. 99-514, Sec. 1235(f)(3), inserted ``or 
1293(a)'' and ``or 1293(c) (as the case may be)'', in concluding 
provision.
    Pub. L. 99-514, Sec. 653(c), inserted before last sentence ``For 
purposes of paragraph (2), the Secretary may by regulation exclude from 
qualifying income foreign currency gains which are not ancillary to the 
company's principal business of investing in stock or securities (or 
options and futures with respect to stock or securities).''
    Subsec. (b)(2). Pub. L. 99-514, Sec. 653(b), inserted ``(as defined 
in section 2(a)(36) of the Investment Company Act of 1940, as amended) 
or foreign currencies, or other income (including but not limited to 
gains from options, futures, or forward contracts) derived with respect 
to its business of investing in such stock, securities, or currencies''.
    Subsec. (e)(1). Pub. L. 99-514, Sec. 652(b), substituted 
``registered management company or registered business development 
company'' for ``registered management company''.
    Subsec. (g). Pub. L. 99-514, Sec. 653(a), added subsec. (g).
    Subsec. (q). Pub. L. 99-514, Sec. 654(a), added subsec. (q).
    1984--Subsec. (a). Pub. L. 98-369 struck out ``(other than a 
personal holding company as defined in section 542)'' after ``any 
domestic corporation'' in introductory provisions.
    1983--Subsec. (b). Pub. L. 97-424 substituted ``section 103(a)'' for 
``section 103(a)(1)'' after ``gross income under''.
    1978--Subsec. (b). Pub. L. 95-600 required that for purposes of 
pars. (2) and (3), amounts excludable from gross income under section 
103(a)(1) shall be treated as included in gross income.
    Subsec. (b)(2). Pub. L. 95-345 inserted provision relating to 
payments with respect to securities loans.
    1976--Subsec. (a)(1). Pub. L. 94-455, Sec. 1901(a)(109)(A), struck 
out ``54 Stat. 789;'' before ``15 U.S.C. 80a-1 to 80b-2)''.
    Subsec. (b)(1), (4)(B). Pub. L. 94-455, Sec. 1901(a)(109)(B), struck 
out ``which began after December 31, 1941'' after ``previous taxable 
year'' in par. (1), and ``or his delegate'' after ``Secretary'' in par. 
(4)(B).
    Subsecs. (c), (d). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out 
``or his delegate'' after ``Secretary'' wherever appearing.
    1975--Subsec. (b). Pub. L. 94-12 inserted provisions directing that, 
for purposes of par. (2), there shall be treated as dividends amounts 
included in gross income under section 951(a)(1)(A)(i) for the taxable 
year to the extent that, under section 959(a)(1), there is a 
distribution out of earnings and profits of the taxable year which are 
attributable to the amounts so included.
    1969--Subsec. (f). Pub. L. 91-172 added subsec. (f).
    1958--Subsec. (e)(1). Pub. L. 85-866, Sec. 38(a), substituted ``not 
earlier than 60 days'' for ``not less than 60 days'' in first sentence.
    Subsec. (e)(2). Pub. L. 85-866, Sec. 38(b), substituted ``issuer'' 
for ``issues''.


                    Effective Date of 1997 Amendment

    Amendment by Pub. L. 105-34 applicable to taxable years beginning 
after Aug. 5, 1997, see section 1271(c) of Pub. L. 105-34, set out as a 
note under section 817 of this title.


                    Effective Date of 1988 Amendment

    Section 1006(n)(2)(C) of Pub. L. 100-647 provided that: 
``Subparagraph (C) of section 851(b)(3) of the 1986 Code (as amended by 
subparagraph (A)), and the amendment made by subparagraph (B) [amending 
this section], shall apply to taxable years beginning after the date of 
the enactment of this Act [Nov. 10, 1988].''
    Amendment by section 1006(m), (n)(1), (2)(A), (4), (5), (o) of Pub. 
L. 100-647 effective, except as otherwise provided, as if included in 
the provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which 
such amendment relates, see section 1019(a) of Pub. L. 100-647, set out 
as a note under section 1 of this title.


                    Effective Date of 1986 Amendment

    Section 652(c) of Pub. L. 99-514 provided that: ``The amendments 
made by this section [amending this section] shall apply to taxable 
years beginning after December 31, 1986.''
    Section 653(d) of Pub. L. 99-514 provided that: ``The amendments 
made by this section [amending this section] shall apply to taxable 
years beginning after the date of the enactment of this Act [Oct. 22, 
1986].''
    Section 654(b) of Pub. L. 99-514 provided that:
    ``(1) In general.--The amendment made by subsection (a) [amending 
this section] shall apply to taxable years beginning after the date of 
the enactment of this Act [Oct. 22, 1986].
    ``(2) Treatment of certain existing series funds.--In the case of a 
regulated investment company which has more than one fund on the date of 
the enactment of this act, and has before such date been treated for 
Federal income tax purposes as a single corporation--
        ``(A) the amendment made by subsection (a), and the resulting 
    treatment of each fund as a separate corporation, shall not give 
    rise to the realization or recognition of income or loss by such 
    regulated investment company, its funds, or its shareholders, and
        ``(B) the tax attributes of such regulated investment company 
    shall be appropriately allocated among its funds.''
    Amendment by section 1235(f)(3) of Pub. L. 99-514 applicable to 
taxable years of foreign corporations beginning after Dec. 31, 1986, see 
section 1235(h) of Pub. L. 99-514, set out as an Effective Date note 
under section 1291 of this title.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-369 applicable to taxable years beginning 
after Dec. 31, 1982, with certain exceptions, see section 1071(a)(5) of 
Pub. L. 98-369, set out as a note under section 852 of this title.


                    Effective Date of 1978 Amendments

    Section 701(s)(3) of Pub. L. 95-600 provided that: ``The amendments 
made by this section [amending this section and section 852 of this 
title] shall apply to taxable years beginning after December 31, 1975.''
    Amendment by Pub. L. 95-345 applicable with respect to amounts 
received after Dec. 31, 1976, as payments with respect to securities 
loans (as defined in section 512(a)(5) of this title), and transfers of 
securities, under agreements described in section 1058 of this title, 
occurring after such date, see section 2(e) of Pub. L. 95-345, set out 
as a note under section 509 of this title.


                    Effective Date of 1976 Amendment

    Amendment by section 1901(a)(109) of Pub. L. 94-455 effective for 
taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. 
L. 94-455, set out as a note under section 2 of this title.


                    Effective Date of 1975 Amendment

    Amendment by Pub. L. 94-12 applicable to taxable years of foreign 
corporations beginning after Dec. 31, 1975, and to taxable years of 
United States shareholders (within the meaning of section 951(b) of this 
title) within which or with which such taxable years of such foreign 
corporations end, see section 602(f) of Pub. L. 94-12, set out as an 
Effective Date note under section 955 of this title.


                    Effective Date of 1969 Amendment

    Section 908(b) of Pub. L. 91-172 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply to taxable years 
of unit investment trusts ending after December 31, 1968, and to taxable 
years of holders of interests in such trusts ending with or within such 
taxable years of such trusts. The enactment of this section shall not be 
construed to result in the realization of gain or loss by any unit 
investment trust or by any holder of an interest in a unit investment 
trust.''


                    Effective Date of 1958 Amendment

    Amendment by Pub. L. 85-866 applicable to taxable years beginning 
after Dec. 31, 1953, and ending after Aug. 16, 1954, see section 1(c)(1) 
of Pub. L. 85-866, set out as a note under section 165 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 11, 50B, 403, 817, 852, 853, 
860L, 992, 1212, 1247, 1296, 7603, 7704 of this title; title 42 section 
1395nn.
