In Monday's Wall Street Journal Fund Track column, Daisy Maxey writes that some closed-end fund investors who are eyeing a cash distribution this year could end up with more shares of their funds instead. That's because of guidance that the IRS extended last month to include publicly traded, regulated investment companies such as closed-end funds. The guidance, which initially covered just real-estate investment trusts, allows them to distribute as little as 10 percent in cash, the remainder being paid in stock.

Typically, closed-end funds distribute at least 90 percent of their annual income and capital gains to shareholders the year it is earned. However, many funds have not been eager to sell holdings against the backdrop of a weak market in order to make these distributions.

The IRS guidance applies to tax years ending on or before December 31, 2009. 

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