In a filing with the Securities and Exchange Commission, Wildermuth Fund revealed that it no longer qualifies as a regulated investment company.
As a result, the fund’s taxable income will be subject to tax at corporate rates without any deduction for distributions to shareholders.
In addition, the filing says distributions will generally be taxable as ordinary income to shareholders to the extent of the fund’s current or accumulated earnings and profits. If the shareholder has held the fund’s shares for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date, the dividends will be eligible to be treated as qualified dividend income.
Any “return of capital” dividends, those that are not paid from the fund’s current or accumulated earnings and profits, are generally not taxable but do reduce the shareholder’s tax basis in the fund shares. If the shareholder’s tax basis has been reduced to zero or below, such distributions are taxable. This will apply for 2022 and any year in the fund does not qualify as a regulated investment company.
The fund may seek to requalify as a RIC in future tax years. Should the fund requalify as a RIC, it could be required to recognize unrealized gains, pay taxes and make distributions before requalifying for taxation as a RIC.
The company advises shareholders to consult their own tax advisors regarding any appliable tax consequences that may result from holding the fund.
Wildermuth Fund is a closed-end interval fund that had raised gross investor equity totaling $223 million and net equity (following total redemptions) of $102 million as of August 31, 2022, according to Robert A. Stanger & Co.