The Internal Revenue Service has released new procedures for shareholders that want the IRS’s automatic consent for changing to or from the net asset value method of accounting for gains or losses on shares in a money market fund.
Revenue Procedure 2016-39 provides the procedures by which a taxpayer can get the automatic consent of the IRS to change to or from the NAV method of accounting provided in Section 1.446-7 of the Income Tax Regulations. The new revenue procedure modifies Rev. Proc. 2016-29.
In conjunction with the revenue procedure, the IRS also issued final regulations in TD 9774, Method of Accounting for Gains and Losses on Shares in Money Market Funds: Broker Returns with Respect to Sales of Shares in Money Market Funds.
The regulations also provide guidance on the information reporting requirements for shares in money market funds, or MMFs, in response to Securities and Exchange Commission rules that change the amount for which certain MMF shares are distributed, redeemed and repurchased. The final regulations affect both MMFs and their shareholders.
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