Business Services Industry
Cash settlement and note from investment adviser are qualifying RIC income.(regulated investment company)
Tax Adviser, The, January, 2008 by Munro, Alan
In Letter Ruling 200739010, the Service ruled that a regulated investment company's (RIC's) receipt of cash and a note from its investment adviser (IA) are qualifying income under Sec. 851(b)(2). Further, although the note caused a Sec. 851(b)(3) asset-test failure, the IRS ruled that satisfaction of the note within 30 days of the close of the quarter cured the failure.
Facts
A RIC invested in a passive foreign investment company (PFIC), which invested in segregated portfolio companies (SPCs) taxable as partnerships. The SPCs held deposits as collateral for the PFIC's trading activities with a company that operated as a private bank. At a certain point, the IA to the PFIC and the SPCs requested a return of its invested money from this private bank....
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