The website Accounting Today posted a story entitled, "IRS Offers Guidance on Money Market Funds," which addresses a couple of the minor outstanding tax issues related to MMF reforms. (It doesn't finalize the proposed "wash sale" and simplification of gains though.) It says, "The Internal Revenue Service has issued a notice and revenue procedure on requirements for investing in money market funds. Notice 2016-32 provides guidance to taxpayers regarding the diversification requirements under Section 817(h) of the Tax Code for a segregated asset account that invests in a government money market fund, or MMF. The notice provides an alternative diversification criterion so that a segregated asset account that invests in a government MMF can meet the diversification requirement." It explains, "In 2014, the Securities and Exchange Commission [amended] the rules governing money market funds. Rule 2a–7 as amended identifies circumstances under which an MMF is permitted or required to impose a liquidity fee or is permitted to impose a redemption gate.... Rule 2a–7 defines a government MMF as an MMF "that invests 99.5 percent or more of its total assets in cash, government securities, and/or repurchase agreements that are collateralized fully [by cash items or government securities]."" It adds, "Revenue Procedure 2016-31 provides that certain contributions that money market funds receive from sponsors may be excluded from the distribution requirements of Section 852(a) of the Tax Code but are included in investment company taxable income for purposes of Section 852(b). The revenue procedure provides temporary relief for certain money market funds that receive contributions from their advisers as the MMFs transition to comply with SEC rules that change how certain MMF shares are priced." In our April 6 News, "ICI Pushes IRS on MMF Tax Reforms; Goldman, USAA T-E Update; Yields," we ran a story on a comment letter filed by the Investment Company Institute urging the IRS to provide guidance to the industry on how to deal with the tax consequences of money fund reform <b:>`_. It says, "With respect to the remaining money market fund guidance requests, we wish to reiterate the industry's priorities. First, the issue for which most immediate guidance is necessary is the diversification of variable insurance product money market funds under section 817(h). Given the quickly approaching compliance deadline for money market fund rule, mutual fund complexes need guidance on this issue before they can determine whether and how to continue using money market funds in their variable insurance products. In the absence of such guidance, it is unclear whether the use of money market funds in such a way will remain a viable strategy." The ICI letter continues, "The second issue for which immediate guidance is necessary is the issue of adviser contributions. Again, fund complexes currently are deciding how to manage their existing money market funds in anticipation of the compliance date of the money market fund rule. The use of adviser contributions may be an important tool necessary to ease the transition for investors from stable net asset value to floating NAV money market funds." See too our July 30, 2014 News, "Reform Floating NAV Accounting Issues Addressed by Treasury Proposal."

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