Section 1.852-12 - Non-RIC earnings and profits(a)Applicability of section 852(a)(2)(A) - (1)In general. An investment company does not satisfy section 852(a)(2)(A) unless- (i) Part I of subchapter M applied to the company for all its taxable years ending on or after November 8, 1983; and(ii) For each corporation to whose earnings and profits the investment company succeeded by the operation of section 381, part I of subchapter M applied for all the corporation's taxable years ending on or after November 8, 1983.(2)Special rule. See section 1071(a)(5)(D) of the Tax Reform Act of 1984, Public Law 98-369 (98 Stat. 1051), for a special rule which treats part I of subchapter M as having applied to an investment company's first taxable year ending after November 8, 1983.(b)Applicability of section 852(a)(2)(B) - (1)In general. An investment company does not satisfy section 852(a)(2)(B) unless, as of the close of the taxable year, it has no earnings and profits other than earnings and profits that-(i) Were earned by a corporation in a year for which part I of subchapter M applied to the corporation and, at all times thereafter, were the earnings and profits of a corporation to which part I of subchapter M applied;(ii) By the operation of section 381 pursuant to a transaction that occurred before December 22, 1992, became the earnings and profits of a corporation to which part I of subchapter M applied and, at all times thereafter, were the earnings and profits of a corporation to which part I of subchapter M applied;(iii) Were accumulated in a taxable year ending before January 1, 1984, by a corporation to which part I of subchapter M applied for any taxable year ending before November 8, 1983; or(iv) Were accumulated in the first taxable year of an investment company that began business in 1983 and that was not a successor corporation.(2)Prior law. For purposes of paragraph (b) of this section, a reference to part I of subchapter M includes a reference to the corresponding provisions of prior law.(c)Effective date. This regulation is effective for taxable years ending on or after December 22, 1992.(d) For treatment of net built-in gain assets of a C corporation that become assets of a RIC, see § 1.337(d)-5T .T.D. 8483, 58 FR 43798, Aug. 18, 1993; 58 FR 49352, Sept. 22, 1993; T.D. 8872, 65 FR 5777 , Feb. 7, 2000