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Form 2438: Undistributed Capital Gains Tax Return
IRS Form 2438 is the Undistributed Capital Gains Tax Return used by Regulated Investment Companies (RICs) and Real Estate Investment Trusts (REITs). This form helps calculate income tax on undistributed capital gains, with a filing deadline of the 30th day after the end of the tax year.
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IRS Form 2438 - Undistributed Capital Gains Tax Return
IRS Form 2438 is the Undistributed Capital Gains Tax Return used by Regulated Investment Companies (RICs) and Real Estate Investment Trusts (REITs). This form helps calculate income tax on undistributed capital gains, with a filing deadline of the 30th day after the end of the tax year.
Risk Radar
Scan points- 1Ensure you attach a copy of Form 2438 to either Form 1120-RIC or Form 1120-REIT.
- 2Filing without attaching a copy to Form 1120-RIC or Form 1120-REIT.
- 3Not correctly identifying the gain on Line 4 (Part I) as 'Net short-term capital gain from line 4, Form 2438' in Form 8949.
- 4Failing to enter the amount from Line 12 (Part II) onto Line 12 of Form 8949.
- 5Omitting the required signature and date by an authorized corporate officer.
Plain English
This form allows investment funds or REITs to report profits from selling assets that have not yet been distributed to investors. It calculates the specific amount of gain subject to income tax under certain election rules. The fund then attaches this document to its main corporate tax return, Form 1120-RIC or Form 1120-REIT.
Submission Date
- Filing date: 2020-11-30 22:10:24
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when a Regulated Investment Company (RIC) or Real Estate Investment Trust (REIT) elects to designate undistributed capital gains under section 852(b)(3)(D) or section 857(b)(3)(C).
- Do not use it if the RIC or REIT does not meet the criteria for electing to designate undistributed capital gains as described above.
- Check Form 1120-RIC or Form 1120-REIT instead when submitting this form with its tax return.
Form selector
Use this form or another form?
Filing an RIC with multiple funds
Each fund must file a separate Form 2438.
✓ Check the definition of 'fund' in section 851(g).
RIC/REIT has assets held since Jan 1, 2001 (under Taxpayer Relief Act)
The basis is determined by the closing market price or fair market value on the deemed sale date.
✓ Verify how this basis applies to your asset's gain calculation.
Reporting net short-term capital gains from Form 8949, Part I, Line 4
Enter the amount from line 4 of Form 8949 onto Line 4 of Form 2438.
✓ Ensure you identify this gain as “Net short- term capital gain from line 4, Form 2438” in column (a) of Form 8949.
Deadline or filing window
The filing trigger is the end of the RIC’s or REIT’s tax year. The deadline requires submission by the 30th day after that tax year ends. While not explicitly stated, the penalty structure implies penalties apply if extensions are used and the return remains late.
Checklist
What you need before filling it out
Filing Deadline
30th day after the end of the RIC’s or REIT’s tax year · General instructions/When To File
Who Must File
Regulated investment companies (RICs) and real estate investment trusts (REITs) electing designation under section 852(b)(3)(D) or 857(b)(3)(C) · Who Must File/Page 2
Basis Calculation (Jan 1, 2001 assets)
Closing market price or fair market value on the date of deemed sale and reacquisition · Form p.3 / First paragraph
Line 4 Entry
Net short-term capital gain from line 4 in Part I of Form 8949 · Form p.3 / Line 4
Penalty for Late Filing (Monthly)
5% of the unpaid tax for each month or part of the month late · Page 2 / Penalty section
Before you submit
- 1Confirm you are filing Form 2438 because your RIC or REIT is electing to designate undistributed capital gains.
- 2Verify the form is dated and signed by an authorized corporate officer.
- 3Check that Line 4 on Form 2438 includes the net short-term capital gain amount from Part I of Form 8949.
- 4Ensure you have entered the correct Employer identification number for your fund/REIT.
- 5Confirm that if your RIC has multiple funds, each separate fund has its own copy of Form 2438 filed.
- 6Verify the tax due is deposited by the 30th day after the end of the tax year (as noted on Line 13).
- 7Attach a copy of Form 2438 to your main return, either Form 1120-RIC or Form 1120-REIT.
How to file this form
- 1Complete all required information fields on Form 2438, including the fund/REIT name and Employer identification number.
- 2Calculate and enter amounts for specific lines, such as Line 4 (net short-term capital gain from Form 8949) and Line 12 (undistributed gains not designated from Form 8949).
- 3Sign and date the Form 2438 using an authorized corporate officer's signature.
- 4Attach a copy of the completed Form 2438 to your main tax return, which must be either Form 1120-RIC or Form 1120-REIT.
- 5Mail the original Form 2438 to the Department of the Treasury Internal Revenue Service Center in Kansas City, MO 64999.
Known limitations
- 1A RIC must file a separate Form 2438 for each fund if it has more than one fund.
- 2If an RIC or REIT is not electing to designate undistributed capital gains under section 852(b)(3)(D) or 857(b)(3)(C), they do not file Form 2438.
- 3When reporting an asset held on January 1, 2001, for which a gain election was made (under section 311 of the Taxpayer Relief Act of 1997), the acquisition date is that of the deemed sale and reacquisition.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current revision is December 2020. The instructions direct users to www.irs.gov/Form2438 for the latest information regarding any developments related to Form 2438.
What changed or needs a fresh check
- Edition date — confirm the revision reads December 2020.
- Filer status — confirm you are an RIC or REIT electing to designate undistributed capital gains.
- Mailing address — verify the filing location is Kansas City, MO 64999.
- Signature — ensure it is signed and dated by a corporate officer authorized to sign (e.g., president, treasurer).
- Attachment requirement — confirm you attach a copy of Form 2438 to Form 1120-RIC or Form 1120-REIT.
Quick Facts
Downloads
After you file
- 1Keep a copy of Form 2438 after filing.
- 2If an RIC or REIT receives a penalty notice, send the IRS an explanation to determine if reasonable cause was met (do not attach this explanation when filing).
- 3RICs and REITs must use electronic funds transfers for all federal tax deposits made.
- 4The original Form 2438 must be filed with the Department of the Treasury Internal Revenue Service in Kansas City, MO 64999.
Sources
- SRCInstructions p.1 — Attach a copy of this form to Form 1120-RIC or to Form 1120-REIT.
- SRCInstructions p.1 — The form covers calendar year 20 or tax year beginning , 20 , ending , 20.
- SRCInstructions p.2 — RICs and REITs file Form 2438 if they elect to designate undistributed capital gains under section 852(b)(3)(D) or 857(b)(3)(C).
- SRCInstructions p.2 — The filing deadline is the 30th day after the end of the RIC’s or the REIT’s tax year.
- SRCInstructions p.2 — Form 2438 must be signed and dated by the president, vice president, treasurer, assistant treasurer, chief accounting officer, or any other authorized corporate officer.
- SRCInstructions p.3 — Column (d) requires entering either gross sales price or net sales price.
- SRCInstructions p.3 — If net sales price is entered in column (d), do not increase the cost or other basis in column (e) by any expenses reflected in the net sales price.
- SRCInstructions p.2 — A penalty of 1/2 of 1% of unpaid tax applies monthly, up to a maximum of 25%.
Common confusion points
Who needs to sign Form 2438?
The form requires a signature and date from the president, vice president, treasurer, assistant treasurer, chief accounting officer, or any other authorized corporate officer (like a tax officer).
→ Check that one of these specific roles signs the document.
What is the deadline for filing Form 2438?
The due date is the 30th day after the end of the RIC’s or REIT’s tax year.
→ Confirm the exact date based on your entity's tax year-end.
How do I report an asset sold for a net sales price?
If you enter the net sales price in column (d), do not increase the cost or other basis in column (e) by any expenses already reflected in that net sales price.
→ Cross-reference this rule with the instructions for Schedule D (Form 1120).
Where should I send Form 2438?
The original form must be sent to the Department of the Treasury Internal Revenue Service Center in Kansas City, MO 64999, and a copy must be attached to Form 1120-RIC or Form 1120-REIT.
→ Do not send the tax form to the office that handles comments (1111 Constitution Ave. NW).
When reporting an asset sold for a gross sales price?
If you report the gross sales price in column (d), increase the cost or other basis by any sale expense, such as broker’s fees or commissions, before entering the amount in column (e).
→ Ensure all expenses are added to the original basis.
What is the penalty for late payment of tax?
Generally, a RIC or REIT may be penalized 1/2 of 1% of the unpaid tax for each month or part of a month it remains unpaid, up to a maximum of 25% of the unpaid tax.
→ Verify that reasonable cause was not the reason for the delay.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- The instructions reference Schedule D (Form 1120) and Form 8949 for definitions of capital assets.
Questions about IRS Form 2438
What is IRS Form 2438 used for?
This form allows investment funds or REITs to report profits from selling assets that have not yet been distributed to investors. It calculates the specific amount of gain subject to income tax under certain election rules. The fund then attaches this document to its main corporate tax return, Form 1120-RIC or Form 1120-REIT.
Who must file IRS Form 2438?
Regulated investment companies (RICs) and real estate investment trusts (REITs) must file Form 2438 if the entity is electing to designate undistributed capital gains under section 852(b)(3)(D) or 857(b)(3)(C). If a RIC has more than one fund, each individual fund needs to submit its own separate Form 2438.
What information does IRS Form 2438 require?
The form collects details in Part I regarding Short-Term Capital Gains and Losses (assets held one year or less), such as the description of property and sales price. Part II captures Long-Term Capital Gains and Losses for assets held longer than one year, including gains from Form 4797.
When is IRS Form 2438 due?
Form 2438 must be filed by the 30th day after the end of the RIC’s or the REIT’s tax year. The form is specifically for calendar year 20 or any tax year beginning , 20 , ending , 20.
Where do I file IRS Form 2438?
The original Form 2438 must be filed with the Department of the Treasury Internal Revenue Service Center in Kansas City, MO 64999. A copy of the form must also be attached to Form 1120-RIC or Form 1120-REIT.
How do I complete IRS Form 2438?
First, complete all necessary fields, including providing the fund's name and EIN. Next, detail gains/losses in Part I (short-term) and Part II (long-term). Finally, the form must be signed and dated by an authorized officer, such as the president or treasurer.
What happens if IRS Form 2438 is filed incorrectly?
If a RIC or REIT fails to file its tax return by the due date, penalties can apply: this may be 5% of unpaid tax for each month or part of the month late, up to a maximum of 25%. The minimum penalty for being more than 60 days late is the smaller of the tax due or $435.
Who needs to sign Form 2438?
The form requires a signature and date from the president, vice president, treasurer, assistant treasurer, chief accounting officer, or any other authorized corporate officer (like a tax officer). Check that one of these specific roles signs the document.
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