Business and Personal Finance Dictionary

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• SHORT-SHORT RULE
  
  A part of the U.S. federal tax code (from 1936 to 1997) that imposed corporate income tax (hence double taxation of income) on a mutual fund that received more than 30 percent of its gross income (i.e., before deducting losses) from gains on positions held less than three months. A mutual fund that violated the short-short rule would owe corporate income tax on all its income for that year. Also known as the 30% Rule. Its advocates argued that the rule would discourage funds from short-term trading that might destabilize the markets. Its opponents pointed out that it discouraged short selling and trading in derivatives.
  
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