Form 8613 – Return of Excise Tax on Undistributed Income of Regulated Investment Companies

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Form 8613 keeps its own calendar even when a regulated investment company's tax year runs into November or December. The 4% excise tax under IRC §4982 is always a calendar-year measure, and the capital gain net income on line 2b is figured for the one-year period ending October 31, not the full year. Funds that rebuild this from scratch each season lose hours on the same handful of lines.

The required distribution on line 4 equals 98% of ordinary investment company taxable income on line 1b plus 98.2% of that October 31 capital gain net income, plus any prior-year shortfall on line 3c. A Form 7004 extension covers only the filing deadline, so the tax still has to be paid by the original due date and credited on line 11 against the line 10 excise tax.

• Pull the §852(b)(2) investment company taxable income figure for line 1a early and document the add-backs for the dividends-paid deduction and any capital gain or loss – missing those add-backs is the most common line 1a error.
• Track the Nov 1 to Oct 31 capital gain net income on a separate roll forward so line 2a does not pick up calendar-year totals by mistake, and apply the 98.2% gross-up on line 2b (not 98%).
• Reconcile the §561 dividends-paid deduction on line 5 to actual calendar-year payments – exclude exempt-interest dividends, and include only §860(f) deficiency dividends actually paid during the calendar year.
• Carry the prior-year grossed-up required distribution and actual distributions into lines 3a, 3b, 7a, and 7b before close, so line 3c (zero floor) and line 7c reconcile without rework.
• Estimate the excise tax with the Form 7004 request and credit it on line 11 – the extension does not delay payment, so a short, defensible estimate avoids interest exposure on the line 12 balance due.

Accountably's tax execution team handles this calendar-year cycle as a standing engagement: preparer pulls and ties out the line 1a through line 8 build, senior reviews against the prior-year grossed-up required distribution, and a final reviewer signs off before the fund officer signs the return. Same workflow every year, same line numbers, no December scramble.

Key Takeaways

• Form 8613 is filed by a regulated investment company (RIC) to report and pay the 4% excise tax under IRC §4982 on undistributed calendar-year income (per IRS Form 8613, Rev. December 2025).
• Form 8613 is a separate filing from the RIC's annual income-tax return (Form 1120-RIC); it is always a calendar-year return regardless of the fund's tax year.
• The required distribution on line 4 equals 98% of ordinary investment company taxable income (line 1b) plus 98.2% of capital gain net income for the one-year period ending October 31 (line 2b) plus any prior-year shortfall on line 3c.
• Line 1a is §852(b)(2) investment company taxable income for the calendar year, computed without regard to the dividends-paid deduction and without regard to any capital gain or loss.
• The line 5 §561 dividends-paid deduction excludes exempt-interest dividends and includes §860(f) deficiency dividends only if actually paid during the calendar year.
• A Form 7004 extension covers the filing deadline only – the §4982 excise tax must still be paid by the original due date and is credited on line 11 against the line 10 excise tax to produce line 12 tax due (or line 13a overpayment).

What Form 8613 Is, In Plain Language

Form 8613 is the calendar-year return a regulated investment company (RIC) files to compute and pay the 4% excise tax under IRC §4982 on undistributed income. It is separate from the RIC's annual income-tax return (Form 1120-RIC). The form runs from line 1a through line 13d, stepping through §852(b)(2) ordinary investment company taxable income, capital gain net income for the one-year period ending October 31, the prior-year shortfall, the §561 dividends-paid deduction, the §852(b)(1) or §852(b)(3)(A) tax base, the prior-year over-distribution carryover, and the resulting excise tax on line 10. The current revision is Form 8613 (Rev. December 2025) – find the form and instructions at www.irs.gov/Form8613.

Who Uses It

• Regulated investment companies (RICs) – the only entity type required to file Form 8613.
• The fund's officer, who signs the return under penalties of perjury with date and title.
• A paid preparer (with PTIN) and the preparer's firm (firm's name, EIN, address, and phone), if a preparer assists.

Why It Exists

Form 8613 exists to enforce the IRC §4982 distribution rules for RICs. If a fund fails to distribute at least 98% of ordinary investment company taxable income for the calendar year and 98.2% of capital gain net income for the one-year period ending October 31 – adjusted for any prior-year shortfall – the fund owes a 4% excise tax on the undistributed amount. Form 8613 is the calendar-year return that computes and remits that tax.

Current Version and Where to Get It

• Current revision: Form 8613 (Rev. December 2025), Cat. No. 63985M, OMB No. 1545-1016.
• Issuing agency: Department of the Treasury, Internal Revenue Service – this is a federal IRS form, not a state program form.
• Where to get it: www.irs.gov/Form8613 hosts the latest form and instructions; download the PDF directly from irs.gov.

Version control matters. In your SOP, reference the form by title and revision date (currently "Form 8613, Rev. December 2025") and refresh the link to www.irs.gov/Form8613 each calendar year so the team always pulls the current version.

How To Open Form 8613 Without Glitches

• Open on desktop using Adobe Reader, not a browser viewer, to ensure all fields load and save correctly.
• If a browser tries to open it, download the file, right click, choose Open with, then select Adobe Reader.
• Keep Adobe Reader current to avoid feature conflicts.
• If you must pull the form on a mobile device, download it for later and complete it on desktop.

Quick tip, I once lost form field data by trusting a browser viewer. Ever since, I save locally, then open with Adobe Reader first.

When To Complete and Who Submits

Form 8613 is filed for each calendar year in which the RIC has §4982 reporting. The return is signed by an officer of the fund under penalties of perjury, with date and title. If a paid preparer assists, the preparer must also sign, indicate self-employed status if applicable, enter a PTIN, and provide the firm's name, EIN, address, and phone.

Typical Timing and Roles

• RIC officer: signs the return under penalties of perjury with date and title.
• Paid preparer (if engaged): signs, enters PTIN, and provides the firm's name, EIN, address, and phone.
• Form 7004 extension: file before the original due date to extend the filing deadline; the §4982 excise tax must still be paid by the original due date and is credited on line 11.
• Calendar-year basis: file Form 8613 for the calendar year even when the RIC's income-tax year is non-calendar.

In practice, the preparer pulls and ties out the line 1a through line 8 build, a senior reviewer confirms it against the prior-year grossed-up required distribution, and the fund officer signs once the §4982 computation is final.

The Compliance Backdrop, What The Federal Rule Expects

Form 8613 implements IRC §4982. The statute requires every RIC to distribute at least 98% of ordinary investment company taxable income for the calendar year and 98.2% of capital gain net income for the one-year period ending October 31. If the fund falls short of either threshold (after adjusting for any prior-year shortfall under §4982(b)(2)), the undistributed amount is subject to a 4% excise tax on line 10.

Section 4982(e)(4) permits a fund whose tax year ends in November or December to elect to substitute its tax year for the one-year period ending October 31. The election applies only to the capital gain measurement period; ordinary investment company taxable income stays on a calendar-year basis.

Purpose of the Form, From Intent To Action

Form 8613 takes the §4982 rules and turns them into a line-by-line calculation. You compute the required distribution on line 4 (lines 1b + 2b + 3c), then the distributed amount on line 8 (lines 5 + 6 + 7c), then the undistributed income on line 9 (line 4 minus line 8, zero floor), then the 4% excise tax on line 10. Lines 11, 12, and 13a reconcile any tax paid with the Form 7004 extension against the line 10 excise tax.

What Good Looks Like

• §852(b)(2) investment company taxable income on line 1a, computed without the dividends-paid deduction and without capital gain or loss.
• Capital gain net income for the one-year period ending October 31 on line 2a, with the 98.2% gross-up on line 2b.
• §561 dividends-paid deduction on line 5, excluding exempt-interest dividends and including §860(f) deficiency dividends only if paid during the calendar year.
• Prior-year grossed-up required distribution and actual distributions reconciled on lines 3a, 3b, 7a, and 7b, with line 3c floored at zero.
• Officer signature under penalties of perjury and paid preparer PTIN with firm details all complete.

Step-By-Step, Completing Lines 1 to 3

These lines set the required distribution the rest of the form reconciles against.

Lines 1a-1b, Ordinary Investment Company Taxable Income

• Line 1a: investment company taxable income under §852(b)(2) for the calendar year, determined without regard to the dividends-paid deduction and without regard to any gain or loss from the sale or exchange of a capital asset.
• Line 1b: line 1a multiplied by 98% (0.98).

The two most common line 1a errors are (a) failing to add back the dividends-paid deduction and (b) leaving capital gain or loss in the figure. Both items are captured elsewhere on the form, so mixing them into line 1a double-counts or omits amounts.

Lines 2a-2b, Capital Gain Net Income

• Line 2a: capital gain net income under §4982(e)(2) for the one-year period ending October 31 of the calendar year, not the calendar year itself.
• Line 2b: line 2a multiplied by 98.2% (0.982).
• A fund whose tax year ends in November or December may check the §4982(e)(4) election box to substitute its tax year for the October 31 period.

Lines 3a-3c, Prior-Year Shortfall Carryover

Line 3a is the grossed-up required distribution for the previous calendar year (last year's lines 1a + 2a, increased by the prior year's shortfall under §4982(b)(2)). Line 3b is the distributed amount for the previous calendar year under §4982(c). Line 3c is line 3a minus line 3b, floored at zero – a prior-year over-distribution does not produce a negative shortfall on line 3c (it carries to line 7c instead).

• Enter prior-year required distribution on line 3a.
• Enter prior-year distributed amount on line 3b.
• Subtract 3b from 3a; if zero or less, enter -0- on line 3c.
• Required distribution on line 4 = line 1b + line 2b + line 3c.

Required Distribution, Line 4

Line 4 is the required distribution: the sum of lines 1b, 2b, and 3c. It is the threshold the fund's actual distributions must clear (through the line 5 §561 deduction, the line 6 §852(b)(1)/(b)(3)(A) tax base, and any line 7c carryover) to avoid the 4% excise tax. The figure pulls together three measurement periods – ordinary investment company taxable income for the calendar year, capital gain net income for the one-year period ending October 31, and any prior-year shortfall – so reconcile each input before signing off.

What To Check Against Line 4

• Line 1b: 98% gross-up of §852(b)(2) ordinary investment company taxable income on line 1a.
• Line 2b: 98.2% gross-up of capital gain net income on line 2a (one-year period ending October 31).
• Line 3c: prior-year shortfall, floored at zero.
• Sum: lines 1b + 2b + 3c = line 4.

If line 4 looks materially off from prior years, walk back to the input lines before adjusting downstream numbers. Most errors at the line 4 level trace back to a missed add-back on line 1a or a calendar-year (instead of Nov 1 – Oct 31) total on line 2a.

Distributed Amount, Lines 5 to 8

Lines 5, 6, and 7c make up the distributed amount on line 8. Line 5 is the §561 dividends-paid deduction during the calendar year, excluding exempt-interest dividends and including §860(f) deficiency dividends only if paid during the calendar year. Line 6 is the amount on which tax is imposed under §852(b)(1) or §852(b)(3)(A) for any tax year ending in or with the calendar year. Line 7c is the prior-year over-distribution carryover (line 7a minus line 7b, floored at zero, where 7a equals 3b and 7b equals 3a).

Line 8 = line 5 + line 6 + line 7c. Line 9 = line 4 minus line 8, floored at zero. Line 10 = line 9 multiplied by 4% (0.04) – the excise tax. If line 8 equals or exceeds line 4, line 9 is zero and no excise tax is owed.

Tax Due, Overpayment, and Direct Deposit, Lines 11 to 13d

Line 11 captures any tax paid with the Form 7004 extension request. Line 12 is line 10 minus line 11 – the tax due. If line 11 exceeds line 10, the excess is an overpayment on line 13a, which can be directly deposited by entering the routing number on line 13b, account type (Checking or Savings) on line 13c, and account number on line 13d.

Line Map

Line	What it captures	Source
11	Tax paid with Form 7004 extension	Extension payment
12	Tax due (line 10 minus line 11)	Calculated
13a	Overpayment (line 11 minus line 10)	Calculated
13b	Routing number for direct deposit of refund	Fund-provided
13c	Account type (Checking or Savings)	Fund-provided
13d	Account number for direct deposit of refund	Fund-provided

• The Form 7004 extension extends the time to file only – the §4982 excise tax must still be paid by the original due date.
• A short, defensible Form 7004 payment estimate reduces interest exposure on the line 12 balance due.
• For direct deposit, double-check routing and account numbers before signing; entries on lines 13b-13d are read literally.

Treat the Form 7004 payment as a real obligation, not a placeholder. Underpaying the extension request leaves the fund exposed to interest even when the final return ties out.

A Practical Walkthrough, From Inputs To Excise Tax

One clean pass through the form, in the order the lines build.

Step 1, Build Lines 1a-1b

Pull §852(b)(2) investment company taxable income for the calendar year. Add back the dividends-paid deduction. Remove any gain or loss from the sale or exchange of a capital asset. Enter the result on line 1a; multiply by 98% (0.98) to get line 1b.

Step 2, Build Lines 2a-2b

• Roll forward capital gain net income for the one-year period ending October 31 of the calendar year (or the elected tax-year period for Nov/Dec year-end funds making the §4982(e)(4) election).
• Enter the figure on line 2a; multiply by 98.2% (0.982) to get line 2b.

Step 3, Build Lines 3a-3c (Prior-Year Shortfall)

Enter last year's grossed-up required distribution on line 3a, the prior-year distributed amount under §4982(c) on line 3b, and the difference (zero floor) on line 3c. Sum lines 1b + 2b + 3c on line 4 – the required distribution.

Step 4, Build Lines 5 to 8 (Distributed Amount)

• Line 5: §561 dividends-paid deduction during the calendar year, excluding exempt-interest dividends and including §860(f) deficiency dividends only if paid during the calendar year.
• Line 6: amount on which tax is imposed under §852(b)(1) or §852(b)(3)(A) for any tax year ending in or with the calendar year.
• Line 7c: prior-year over-distribution carryover (line 7a minus 7b, floored at zero; 7a = 3b, 7b = 3a).
• Line 8 = line 5 + line 6 + line 7c.

Step 5, Compute Excise Tax and Reconcile Payment

• Line 9 = line 4 minus line 8 (zero floor) – undistributed income.
• Line 10 = line 9 × 4% (0.04) – the excise tax.
• Line 11: tax paid with Form 7004 extension request.
• Line 12 = line 10 minus line 11 – tax due. If line 11 exceeds line 10, the excess is an overpayment on line 13a.
• Officer signs under penalties of perjury; paid preparer signs and enters PTIN with firm details.

Common Pitfalls And How To Avoid Them

Pitfall 1, Wrong measurement period on line 2a

Line 2a is capital gain net income for the one-year period ending October 31 of the calendar year, not for the calendar year. Pulling Jan 1 – Dec 31 totals into line 2a is the single most common §4982 error. Roll forward a separate Nov 1 – Oct 31 schedule and tie it out before December close.

Pitfall 2, 98% instead of 98.2% on line 2b

The gross-up on line 2b is 98.2% (0.982), not 98%. The 98% figure applies only to line 1b (ordinary income). Older internal templates predating the §4982(b)(1)(B) amendment frequently still show 98% on both lines – correct the template, not just the entry.

Pitfall 3, Line 1a built without the add-backs

Line 1a is §852(b)(2) investment company taxable income determined without the dividends-paid deduction and without any capital gain or loss. If you pull the figure straight off the income-tax workpapers without adding back the dividends-paid deduction and removing capital gain/loss, line 1a will be wrong by definition.

Pitfall 4, Treating Form 7004 as extending payment

Form 7004 extends the time to file Form 8613. It does not extend the time to pay the §4982 excise tax. Estimate the tax with the extension request and credit it on line 11 – underpaying the extension leaves the fund exposed to interest even when the final return ties out.

Pitfall 5, Carrying a negative shortfall into line 3c

Line 3c is floored at zero. A prior-year over-distribution does not reduce the current-year required distribution at line 3c – it carries to line 7c instead and adds to the distributed amount on line 8. If line 3b exceeds line 3a, enter -0- on line 3c.

Quality Control Checklist Before You Send

A short pre-submission check to reduce back-and-forth.

• Line 1a is §852(b)(2) ICTI, computed without the dividends-paid deduction and without capital gain or loss.
• Line 1b equals line 1a × 98%.
• Line 2a is capital gain net income for the one-year period ending October 31 (or the elected tax-year period for Nov/Dec year-end funds).
• Line 2b equals line 2a × 98.2%.
• Lines 3a, 3b, 3c tie to prior-year required distribution and actual distributions, with line 3c floored at zero.
• Line 5 excludes exempt-interest dividends; §860(f) deficiency dividends are included only if paid during the calendar year.
• Line 8 reconciles to line 5 + line 6 + line 7c.
• Line 10 equals line 9 × 4%.
• Line 11 ties to the Form 7004 payment, and lines 12 / 13a reconcile.
• All required signatures are present and dated.

When in doubt, ask, "Could a senior reviewer reproduce every figure on this form from the underlying workpapers?" If yes, the return is ready for the fund officer to sign.

Line-Reference Templates You Can Reuse

A compact line-reference table for the fund preparer and the senior reviewer to share. Drop it into the SOP or workpaper index.

Line Reference Template

Line	What it captures	Source / formula	Reviewer check
1a	§852(b)(2) investment company taxable income for the calendar year	Without DPD and without capital gain/loss	Confirm add-backs
1b	98% of line 1a	1a × 0.98	Tie to line 1a
2a	Capital gain net income, 1-year period ending Oct 31	§4982(e)(2) (or elected tax year)	Confirm Nov 1 – Oct 31 roll forward
2b	98.2% of line 2a	2a × 0.982	Tie to line 2a; not 98%
3a / 3b / 3c	Prior-year shortfall mechanic	3a – 3b (zero floor) = 3c	Tie 3a / 3b to prior return
4	Required distribution	1b + 2b + 3c	Footing check
5	§561 dividends-paid deduction	Excl. exempt-interest; incl. §860(f) deficiency dividends paid in year	Tie to payment records
6	§852(b)(1) / (b)(3)(A) tax base	For any tax year ending in or with calendar year	Tie to RIC tax return
7a / 7b / 7c	Prior-year over-distribution carryover	7a (=3b) – 7b (=3a), zero floor = 7c	Tie to line 3 figures
8	Distributed amount	5 + 6 + 7c	Footing check
9	Undistributed income	4 – 8 (zero floor)	Confirm floor applied
10	Excise tax	9 × 0.04	Footing check
11 / 12 / 13a	Form 7004 credit, tax due, overpayment	10 – 11 = 12; 11 – 10 = 13a	Tie 11 to extension payment

Keep one shared template across all funds the team handles. Same line references, same reviewer checks, no per-engagement variation.

Accessibility And Tech Tips

• Always download the form and open with Adobe Reader on desktop.
• Update Reader to the current version to avoid field issues.
• For accessibility, confirm the form is readable by screen readers in your environment, and provide assistance on request.
• If you must collect signatures remotely, follow your program’s policy on electronic signatures and keep the approval trail with the form.

Common Mistakes We See Every Season

The same patterns surface every December when funds rush Form 8613 out the door. Most trace to a single line item where the input is wrong from the start.

Reusable Checklists

These checklists are copy-paste ready for a fund SOP. Each item is one decision or one action so a reviewer can move down the list without re-reading the form.

Keep 8613 Season From Stalling

The drag on Form 8613 is rarely the form itself. It is the inputs around it – pulling §852(b)(2) ordinary income, rolling forward capital gain net income for the Nov 1 – Oct 31 period, reconciling the prior-year shortfall, and tying the §561 dividends-paid deduction to actual calendar-year payments. When those inputs are not standardized, the form sits while December close work piles up.

The fix is to make the calculation workflow look the same every year. Standard inputs feed a standard form. Standard reviewer checks, standard sign-off, standard Form 7004 estimate. Senior reviewers spend their time on the judgment calls, not on chasing missing add-backs.

• Use a single line-1a workpaper that explicitly captures the §852(b)(2) figure plus the dividends-paid add-back plus the capital gain/loss removal, so the inputs are visible before line 1a is entered.
• Maintain a separate Nov 1 – Oct 31 capital gain net income roll forward so line 2a does not pick up calendar-year totals by mistake, and apply 98.2% (not 98%) on line 2b.
• Reconcile the §561 dividends-paid deduction on line 5 to actual calendar-year payments – exclude exempt-interest dividends, include §860(f) deficiency dividends only if paid during the calendar year.
• Carry the prior-year grossed-up required distribution and actual distributions into lines 3a, 3b, 7a, and 7b before close, so line 3c (zero floor) and line 7c reconcile without rework.
• Estimate the excise tax with the Form 7004 request and credit it on line 11 – the extension does not delay payment, so a short, defensible estimate avoids interest exposure on the line 12 balance due.

This is the workflow discipline Accountably brings to calendar-year RIC filings. Structured inputs, defined review layers, and a single source of truth for every line – the same approach our delivery teams use to keep complex engagements moving without rework.

FAQs

Who files Form 8613?

A regulated investment company (RIC) files Form 8613 to report and pay the 4% excise tax under IRC §4982 on undistributed calendar-year income. It is a separate return from the RIC's annual income-tax return on Form 1120-RIC.

Is Form 8613 filed on a calendar-year or fiscal-year basis?

Calendar-year. Form 8613 is always a calendar-year return, even when the RIC has a non-calendar fiscal tax year for income-tax purposes. A fund whose tax year ends in November or December may make the §4982(e)(4) election to substitute its tax year for the one-year period ending October 31, but only for the capital gain measurement period.

What percentages apply on lines 1b and 2b?

Line 1b is 98% of ordinary investment company taxable income on line 1a. Line 2b is 98.2% of capital gain net income on line 2a (one-year period ending October 31). Older internal templates that still show 98% on line 2b reflect the pre-amendment §4982(b)(1)(B) figure and need to be updated.

Does Form 7004 extend the payment deadline?

No. Form 7004 extends the time to file Form 8613 only. The §4982 excise tax must still be paid by the original due date. Tax paid with the extension request is credited on line 11 against the line 10 excise tax to produce line 12 tax due (or line 13a overpayment).

Are exempt-interest dividends or deficiency dividends included on line 5?

Exempt-interest dividends are excluded from line 5, even though they would be deductible for income-tax purposes under §561. §860(f) deficiency dividends are included on line 5 only if they were actually paid during the calendar year being reported – declared-but-unpaid amounts do not qualify.

What happens to a prior-year over-distribution?

A prior-year over-distribution does not produce a negative figure on line 3c – line 3c is floored at zero. Instead, the excess (line 7a minus line 7b, where 7a equals 3b and 7b equals 3a) carries to line 7c and adds to the current-year distributed amount on line 8.