; treatment of short sales (1) In general If the taxpayer (or a related person) enters into any transaction which substantially reduces the risk of loss from holding any asset, such asset shall not be treated as an indexed asset for the period of such reduced risk. (2) Short sales (A) In general In the case of a short sale of an indexed asset with a short sale period in excess of 3 years, for purposes of this title, the amount realized shall be an amount equal to the amount realized (determined without regard to this paragraph) increased by the applicable inflation adjustment. In applying subsection (c)(2) for purposes of the preceding sentence, the date on which the property is sold short shall be treated as the date of acquisition and the closing date for the sale shall be treated as the date of disposition. (B) Short sale period For purposes of subparagraph (A), the short sale period begins on the day that the property is sold and ends on the closing date for the sale. (e) Treatment of regulated investment companies and real estate investment trusts (1) Adjustments at entity level (A) In general Except as otherwise provided in this paragraph, the adjustment under subsection (a) shall be allowed to any qualified investment entity (including for purposes of determining the earnings and profits of such entity). (B) Exception for corporate shareholders Under regulations— (i) in the case of a distribution by a qualified investment entity (directly or indirectly) to a corporation— (I) the determination of whether such distribution is a dividend shall be made without regard to this section, and (II) the amount treated as gain by reason of the receipt of any capital gain dividend shall be increased by the percentage by which the entity’s net capital gain for the taxable year (determined without regard to this section) exceeds the entity’s net capital gain for such year determined with regard to this section, and (ii) there shall be other appropriate adjustments (including deemed distributions) so as to ensure that the