CA AB296

Excludes net short-term capital gain distributions from regulated investment companies and real estate investment trusts from being treated as principal allocations in partial liquidations.

Clarifies that capital gain dividends from regulated investment companies or real estate investment trusts shall not include net short-term capital gain distributions.

Allows trustees to rely on written statements from distributing entities and actual knowledge regarding whether receipts are from capital asset sales without investigating further.

Establishes a 30-day safe harbor where receipts over 10 percent of trust interest value are automatically deemed partial liquidations if no written statement is provided by the distributing entity.

Declares the act an urgency statute effective immediately to align state law with federal tax law treatment of capital gain dividends.