Tax reform impact on investment companies

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March 2018


The 2017 tax reform reconciliation legislation (the Act) makes important changes to certain aspects of the taxation of investment company products such as mutual funds, business development companies (BDCs), and master limited partnership focused corporations (MLP Funds). The impact of the Act on investment companies was somewhat muted by the exclusion of proposals to change retirement plan contribution limits, require a first-in, first-out lot selection method for security sales, and modernize the tax treatment of derivatives. It is important to understand how the changes made by the Act impact funds and fund shareholders.

The takeaway

The 2017 tax reform act includes a wide range of provisions that may impact investment companies. While many of these provisions may be narrow in scope, their impact on a fund’s tax compliance can be significant. In addition, the impact of some provisions extends beyond tax to impact other areas such as fund offering documents and NAV reporting. To avoid unexpected consequences, it is important to analyze the Act’s provisions impacting investment companies. President Trump’s signature was merely the first step in the government's implementation of this significant new legislation. There remains a myriad of questions in all areas of the law surrounding intent, interpretation, and applicability.

For additional information

The following links provide access to PwC’s analysis of the Act, the final statutory text, the Conference Committee report, and revenue estimates released by the Joint Committee on Taxation’s staff. For more information and to subscribe to a free two-week trial see Inside Tax Policy: Watch policy unfold. 

Contact us

Brian Rebhun

Asset Management Tax Leader, PwC US

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