7932 / How are dividends paid by a RIC after the close of a taxable year treated?

If a RIC declares a dividend on or before the later of (1) the 15th day of the ninth month following the close of the tax year or (2) the due date for filing the RIC’s tax return if the RIC has obtained an extension of time for filing the return, the RIC can elect to treat the dividend as being paid within the tax year. In other words, in these cases, the RIC can declare a dividend in a subsequent tax year that is treated as though it was declared in the preceding tax year for purposes of meeting the income distribution requirements that apply to RICs (see Q 7928).

In order to qualify for this option, the RIC must also distribute the dividend to shareholders in the 12-month period following the close of the tax year, and no later than the date on which the first dividend payment is made for the same type of dividend after the dividend is declared.¹

The RIC shareholder is treated as though the dividend was received in the tax year in which the distribution is made.²

See Q 7933 to Q 7935 for a discussion of the different types of dividends that may be distributed by a RIC.

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1.  IRC § 855(a).