Definition of Regulation M:
Regulation M is outlined in IRS tax code Title 26, beginning with Section 851. Regulation M primarily applies to regulated investment companies that would have these payouts from investments. These companies have U.S. operations and are registered as investment companies as directed by the Investment Company Act of 1940. As defined by the act legislation, these companies can take numerous forms and offer all kinds of investment vehicles including mutual funds, exchange-traded funds (ETFs), real estate investment trusts (REITs), and unit investment trusts (UITs).
Regulation created to avoid double taxation. Regulation M allows taxes to pass from investment company capital gains, interest distributions and dividends onto individual investors.
Regulation M, also known as Subchapter M, is an Internal Revenue Service (IRS) regulation that allows regulated investment companies to pass taxes from capital gains, dividends, and interest distributions onto individual investors. Regulation M conforms to the conduit theory, which states that investment firms should pass capital gains, interest, and dividends to shareholders in order to avoid double taxation by the company and the individual investors.
How to use Regulation M in a sentence?
- This is in accordance with conduit theory so that investment companies, therefore, are not required to pay portfolio taxes on these dispersed payouts.
- Most regulated investment companies utilize this regulation to pass through distributions to shareholders for the purpose of avoiding double taxation.
- Regulation M is an IRS regulation that allows regulated investment companies to pass taxes from capital gains, dividends, and interest distributions onto individual investors.
Meaning of Regulation M & Regulation M Definition