-CITE-
26 USC Subchapter J - Estates, Trusts, Beneficiaries, and
Decedents 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
-HEAD-
SUBCHAPTER J - ESTATES, TRUSTS, BENEFICIARIES, AND DECEDENTS
-MISC1-
Part
I. Estates, trusts, and beneficiaries.
II. Income in respect of decedents.
-SECREF-
SUBCHAPTER REFERRED TO IN OTHER SECTIONS
This subchapter is referred to in sections 102, 511, 852, 2055 of
this title.
-End-
-CITE-
26 USC PART I - ESTATES, TRUSTS, AND BENEFICIARIES 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
-HEAD-
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
-MISC1-
Subpart
A. General rules for taxation of estates and trusts.
B. Trusts which distribute current income only.
C. Estates and trusts which may accumulate income or
which distribute corpus.
D. Treatment of excess distributions by trusts.
E. Grantors and others treated as substantial owners.
F. Miscellaneous.
-SECREF-
PART REFERRED TO IN OTHER SECTIONS
This part is referred to in sections 59, 67, 543, 553 of this
title.
-End-
-CITE-
26 USC Subpart A - General Rules for Taxation of Estates
and Trusts 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart A - General Rules for Taxation of Estates and Trusts
-HEAD-
SUBPART A - GENERAL RULES FOR TAXATION OF ESTATES AND TRUSTS
-MISC1-
Sec.
641. Imposition of tax.
642. Special rules for credits and deductions.
643. Definitions applicable to subparts A, B, C, and D.
644. Taxable year of trusts.
645. Certain revocable trusts treated as part of estate.
646. Tax treatment of electing Alaska Native Settlement
Trusts.
AMENDMENTS
2001 - Pub. L. 107-16, title VI, Sec. 671(c)(1), June 7, 2001,
115 Stat. 147, added item 646.
1998 - Pub. L. 105-206, title VI, Sec. 6013(a)(2), July 22, 1998,
112 Stat. 819, renumbered item 646 as 645.
1997 - Pub. L. 105-34, title V, Sec. 507(b)(3), title XIII, Sec.
1305(c), Aug. 5, 1997, 111 Stat. 857, 1041, added items 644 and 646
and struck out former items 644 "Special rule for gain on property
transferred to trust at less than fair market value" and 645
"Taxable year of trusts".
1986 - Pub. L. 99-514, title XIV, Sec. 1403(b), Oct. 22, 1986,
100 Stat. 2713, added item 645.
1976 - Pub. L. 94-455, title VII, Sec. 701(g)(2), Oct. 4, 1976,
90 Stat. 1580, added item 644.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in sections 643, 671, 1312 of this
title.
-End-
-CITE-
26 USC Sec. 641 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart A - General Rules for Taxation of Estates and Trusts
-HEAD-
Sec. 641. Imposition of tax
-STATUTE-
(a) Application of tax
The tax imposed by section 1(e) shall apply to the taxable income
of estates or of any kind of property held in trust, including -
(1) income accumulated in trust for the benefit of unborn or
unascertained persons or persons with contingent interests, and
income accumulated or held for future distribution under the
terms of the will or trust;
(2) income which is to be distributed currently by the
fiduciary to the beneficiaries, and income collected by a
guardian of an infant which is to be held or distributed as the
court may direct;
(3) income received by estates of deceased persons during the
period of administration or settlement of the estate; and
(4) income which, in the discretion of the fiduciary, may be
either distributed to the beneficiaries or accumulated.
(b) Computation and payment
The taxable income of an estate or trust shall be computed in the
same manner as in the case of an individual, except as otherwise
provided in this part. The tax shall be computed on such taxable
income and shall be paid by the fiduciary. For purposes of this
subsection, a foreign trust or foreign estate shall be treated as a
nonresident alien individual who is not present in the United
States at any time.
(c) Special rules for taxation of electing small business trusts
(1) In general
For purposes of this chapter -
(A) the portion of any electing small business trust which
consists of stock in 1 or more S corporations shall be treated
as a separate trust, and
(B) the amount of the tax imposed by this chapter on such
separate trust shall be determined with the modifications of
paragraph (2).
(2) Modifications
For purposes of paragraph (1), the modifications of this
paragraph are the following:
(A) Except as provided in section 1(h), the amount of the tax
imposed by section 1(e) shall be determined by using the
highest rate of tax set forth in section 1(e).
(B) The exemption amount under section 55(d) shall be zero.
(C) The only items of income, loss, deduction, or credit to
be taken into account are the following:
(i) The items required to be taken into account under
section 1366.
(ii) Any gain or loss from the disposition of stock in an S
corporation.
(iii) To the extent provided in regulations, State or local
income taxes or administrative expenses to the extent
allocable to items described in clauses (i) and (ii).
No deduction or credit shall be allowed for any amount not
described in this paragraph, and no item described in this
paragraph shall be apportioned to any beneficiary.
(D) No amount shall be allowed under paragraph (1) or (2) of
section 1211(b).
(3) Treatment of remainder of trust and distributions
For purposes of determining -
(A) the amount of the tax imposed by this chapter on the
portion of any electing small business trust not treated as a
separate trust under paragraph (1), and
(B) the distributable net income of the entire trust,
the items referred to in paragraph (2)(C) shall be excluded.
Except as provided in the preceding sentence, this subsection
shall not affect the taxation of any distribution from the trust.
(4) Treatment of unused deductions where termination of separate
trust
If a portion of an electing small business trust ceases to be
treated as a separate trust under paragraph (1), any carryover or
excess deduction of the separate trust which is referred to in
section 642(h) shall be taken into account by the entire trust.
(5) Electing small business trust
For purposes of this subsection, the term "electing small
business trust" has the meaning given such term by section
1361(e)(1).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 215; Pub. L. 91-172, title VIII,
Sec. 803(d)(3), Dec. 30, 1969, 83 Stat. 684; Pub. L. 94-455, title
VII, Sec. 701(e)(2), Oct. 4, 1976, 90 Stat. 1579; Pub. L. 95-30,
title I, Sec. 101(d)(8), May 23, 1977, 91 Stat. 134; Pub. L.
104-188, title I, Sec. 1302(d), Aug. 20, 1996, 110 Stat. 1778; Pub.
L. 105-34, title XVI, Sec. 1601(i)(3)(B), Aug. 5, 1997, 111 Stat.
1093; Pub. L. 105-206, title VI, Sec. 6007(f)(2), July 22, 1998,
112 Stat. 810.)
-MISC1-
AMENDMENTS
1998 - Subsecs. (c), (d). Pub. L. 105-206 redesignated subsec.
(d) as (c) and struck out heading and text of former subsec. (c).
Text read as follows:
"(1) General rule. - For purposes of this part, the taxable
income of a trust does not include the amount of any includible
gain as defined in section 644(b) reduced by any deductions
properly allocable thereto.
"(2) Cross reference. -
"For the taxation of any includible gain, see section 644."
1997 - Subsec. (b). Pub. L. 105-34 inserted at end "For purposes
of this subsection, a foreign trust or foreign estate shall be
treated as a nonresident alien individual who is not present in the
United States at any time."
1996 - Subsec. (d). Pub. L. 104-188 added subsec. (d).
1977 - Subsec. (a). Pub. L. 95-30 substituted "section 1(e)" for
"section 1(d)" in introductory provisions.
1976 - Subsec. (c). Pub. L. 94-455 added subsec. (c).
1969 - Subsec. (a). Pub. L. 91-172 substituted "The tax imposed
by section 1(d)" for "The taxes imposed by this chapter on
individuals".
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 effective as if included in the
provisions of the Small Business Job Protection Act of 1996, Pub.
L. 104-188, to which it relates, see section 1601(j) of Pub. L.
105-34, set out as a note under section 23 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1317(a) of title I of Pub. L. 104-188 provided that:
"Except as otherwise provided in this subtitle [subtitle C (Secs.
1301-1317) of title I of Pub. L. 104-188], the amendments made by
this subtitle [amending this section and sections 170, 404, 512,
1042, 1237, 1361, 1362, 1366 to 1368, 1371, 1375, 1377, 1504, 6037,
and 6233 of this title and repealing sections 6241 to 6245 of this
title] shall apply to taxable years beginning after December 31,
1996."
EFFECTIVE DATE OF 1977 AMENDMENT
Amendment by Pub. L. 95-30 applicable to taxable years beginning
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable to transfers in trust made
after May 21, 1976, see section 701(h) of Pub. L. 94-455, set out
as a note under section 667 of this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable to taxable years beginning
after Dec. 31, 1970, see section 803(f) of Pub. L. 91-172, set out
as a note under section 1 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 646, 1361 of this title.
-End-
-CITE-
26 USC Sec. 642 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart A - General Rules for Taxation of Estates and Trusts
-HEAD-
Sec. 642. Special rules for credits and deductions
-STATUTE-
(a) Foreign tax credit allowed
An estate or trust shall be allowed the credit against tax for
taxes imposed by foreign countries and possessions of the United
States, to the extent allowed by section 901, only in respect of so
much of the taxes described in such section as is not properly
allocable under such section to the beneficiaries.
(b) Deduction for personal exemption
(1) Estates
An estate shall be allowed a deduction of $600.
(2) Trusts
(A) In general
Except as otherwise provided in this paragraph, a trust shall
be allowed a deduction of $100.
(B) Trusts distributing income currently
A trust which, under its governing instrument, is required to
distribute all of its income currently shall be allowed a
deduction of $300.
(C) Disability trusts
(i) In general
A qualified disability trust shall be allowed a deduction
equal to the exemption amount under section 151(d),
determined -
(I) by treating such trust as an individual described in
section 151(d)(3)(C)(iii), and
(II) by applying section 67(e) (without the reference to
section 642(b)) for purposes of determining the adjusted
gross income of the trust.
(ii) Qualified disability trust
For purposes of clause (i), the term "qualified disability
trust" means any trust if -
(I) such trust is a disability trust described in
subsection (c)(2)(B)(iv) of section 1917 of the Social
Security Act (42 U.S.C. 1396p), and
(II) all of the beneficiaries of the trust as of the
close of the taxable year are determined by the
Commissioner of Social Security to have been disabled
(within the meaning of section 1614(a)(3) of the Social
Security Act, 42 U.S.C. 1382c(a)(3)) for some portion of
such year.
A trust shall not fail to meet the requirements of subclause
(II) merely because the corpus of the trust may revert to a
person who is not so disabled after the trust ceases to have
any beneficiary who is so disabled.
(3) Deductions in lieu of personal exemption
The deductions allowed by this subsection shall be in lieu of
the deductions allowed under section 151 (relating to deduction
for personal exemption).
(c) Deduction for amounts paid or permanently set aside for a
charitable purpose
(1) General rule
In the case of an estate or trust (other then (!1) a trust
meeting the specifications of subpart B), there shall be allowed
as a deduction in computing its taxable income (in lieu of the
deduction allowed by section 170(a), relating to deduction for
charitable, etc., contributions and gifts) any amount of the
gross income, without limitation, which pursuant to the terms of
the governing instrument is, during the taxable year, paid for a
purpose specified in section 170(c) (determined without regard to
section 170(c)(2)(A)). If a charitable contribution is paid after
the close of such taxable year and on or before the last day of
the year following the close of such taxable year, then the
trustee or administrator may elect to treat such contribution as
paid during such taxable year. The election shall be made at such
time and in such manner as the Secretary prescribes by
regulations.
(2) Amounts permanently set aside
In the case of an estate, and in the case of a trust (other
than a trust meeting the specifications of subpart B) required by
the terms of its governing instrument to set aside amounts which
was -
(A) created on or before October 9, 1969, if -
(i) an irrevocable remainder interest is transferred to or
for the use of an organization described in section 170(c),
or
(ii) the grantor is at all times after October 9, 1969,
under a mental disability to change the terms of the trust;
or
(B) established by a will executed on or before October 9,
1969, if -
(i) the testator dies before October 9, 1972, without
having republished the will after October 9, 1969, by codicil
or otherwise,
(ii) the testator at no time after October 9, 1969, had the
right to change the portions of the will which pertain to the
trust, or
(iii) the will is not republished by codicil or otherwise
before October 9, 1972, and the testator is on such date and
at all times thereafter under a mental disability to
republish the will by codicil or otherwise,
there shall also be allowed as a deduction in computing its
taxable income any amount of the gross income, without
limitation, which pursuant to the terms of the governing
instrument is, during the taxable year, permanently set aside for
a purpose specified in section 170(c), or is to be used
exclusively for religious, charitable, scientific, literary, or
educational purposes, or for the prevention of cruelty to
children or animals, or for the establishment, acquisition,
maintenance, or operation of a public cemetery not operated for
profit. In the case of a trust, the preceding sentence shall
apply only to gross income earned with respect to amounts
transferred to the trust before October 9, 1969, or transferred
under a will to which subparagraph (B) applies.
(3) Pooled income funds
In the case of a pooled income fund (as defined in paragraph
(5)), there shall also be allowed as a deduction in computing its
taxable income any amount of the gross income attributable to
gain from the sale of a capital asset held for more than 1 year,
without limitation, which pursuant to the terms of the governing
instrument is, during the taxable year, permanently set aside for
a purpose specified in section 170(c).
(4) Adjustments
To the extent that the amount otherwise allowable as a
deduction under this subsection consists of gain described in
section 1202(a), proper adjustment shall be made for any
exclusion allowable to the estate or trust under section 1202. In
the case of a trust, the deduction allowed by this subsection
shall be subject to section 681 (relating to unrelated business
income).
(5) Definition of pooled income fund
For purposes of paragraph (3), a pooled income fund is a trust
-
(A) to which each donor transfers property, contributing an
irrevocable remainder interest in such property to or for the
use of an organization described in section 170(b)(1)(A) (other
than in clauses (vii) or (viii)), and retaining an income
interest for the life of one or more beneficiaries (living at
the time of such transfer),
(B) in which the property transferred by each donor is
commingled with property transferred by other donors who have
made or make similar transfers,
(C) which cannot have investments in securities which are
exempt from the taxes imposed by this subtitle,
(D) which includes only amounts received from transfers which
meet the requirements of this paragraph,
(E) which is maintained by the organization to which the
remainder interest is contributed and of which no donor or
beneficiary of an income interest is a trustee, and
(F) from which each beneficiary of an income interest
receives income, for each year for which he is entitled to
receive the income interest referred to in subparagraph (A),
determined by the rate of return earned by the trust for such
year.
For purposes of determining the amount of any charitable
contribution allowable by reason of a transfer of property to a
pooled fund, the value of the income interest shall be determined
on the basis of the highest rate of return earned by the fund for
any of the 3 taxable years immediately preceding the taxable year
of the fund in which the transfer is made. In the case of funds
in existence less than 3 taxable years preceding the taxable year
of the fund in which a transfer is made the rate of return shall
be deemed to be 6 percent per annum, except that the Secretary
may prescribe a different rate of return.
(6) Taxable private foundations
In the case of a private foundation which is not exempt from
taxation under section 501(a) for the taxable year, the
provisions of this subsection shall not apply and the provisions
of section 170 shall apply.
(d) Net operating loss deduction
The benefit of the deduction for net operating losses provided by
section 172 shall be allowed to estates and trusts under
regulations prescribed by the Secretary.
(e) Deduction for depreciation and depletion
An estate or trust shall be allowed the deduction for
depreciation and depletion only to the extent not allowable to
beneficiaries under section 167(d) and 611(b).
(f) Amortization deductions
The benefit of the deductions for amortization provided by
sections 169 and 197 shall be allowed to estates and trusts in the
same manner as in the case of an individual. The allowable
deduction shall be apportioned between the income beneficiaries and
the fiduciary under regulations prescribed by the Secretary.
(g) Disallowance of double deductions
Amounts allowable under section 2053 or 2054 as a deduction in
computing the taxable estate of a decedent shall not be allowed as
a deduction (or as an offset against the sales price of property in
determining gain or loss) in computing the taxable income of the
estate or of any other person, unless there is filed, within the
time and in the manner and form prescribed by the Secretary, a
statement that the amounts have not been allowed as deductions
under section 2053 or 2054 and a waiver of the right to have such
amounts allowed at any time as deductions under section 2053 or
2054. Rules similar to the rules of the preceding sentence shall
apply to amounts which may be taken into account under section
2621(a)(2) or 2622(b). This subsection shall not apply with respect
to deductions allowed under part II (relating to income in respect
of decedents).
(h) Unused loss carryovers and excess deductions on termination
available to beneficiaries
If on the termination of an estate or trust, the estate or trust
has -
(1) a net operating loss carryover under section 172 or a
capital loss carryover under section 1212, or
(2) for the last taxable year of the estate or trust deductions
(other than the deductions allowed under subsections (b) or (c))
in excess of gross income for such year,
then such carryover or such excess shall be allowed as a deduction,
in accordance with regulations prescribed by the Secretary, to the
beneficiaries succeeding to the property of the estate or trust.
(i) Certain distributions by cemetery perpetual care funds
In the case of a cemetery perpetual care fund which -
(1) was created pursuant to local law by a taxable cemetery
corporation for the care and maintenance of cemetery property,
and
(2) is treated for the taxable year as a trust for purposes of
this subchapter,
any amount distributed by such fund for the care and maintenance of
gravesites which have been purchased from the cemetery corporation
before the beginning of the taxable year of the trust and with
respect to which there is an obligation to furnish care and
maintenance shall be considered to be a distribution solely for
purposes of sections 651 and 661, but only to the extent that the
aggregate amount so distributed during the taxable year does not
exceed $5 multiplied by the aggregate number of such gravesites.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 215; Pub. L. 87-834, Sec.
13(c)(2)(A), Oct. 16, 1962, 76 Stat. 1034; Pub. L. 88-272, title
II, Sec. 201(d)(6)(A), (B), Feb. 26, 1964, 78 Stat. 32; Pub. L.
89-621, Sec. 2(a), Oct. 4, 1966, 80 Stat. 872; Pub. L. 91-172,
title II, Sec. 201(b), title VII, Sec. 704(b)(2), Dec. 30, 1969, 83
Stat. 558, 669; Pub. L. 92-178, title III, Sec. 303(c)(4), title
VII, Secs. 701(b), 702(b), Dec. 10, 1971, 85 Stat. 522, 561, 562;
Pub. L. 94-455, title XIV, Sec. 1402(b)(1)(J), (2), title XIX,
Secs. 1901(b)(1)(H)(i), 1906(b)(13)(A), 1951(c)(2)(B), title XX,
Sec. 2009(d), title XXI, Sec. 2124(a)(3)(B), Oct. 4, 1976, 90 Stat.
1732, 1791, 1834, 1840, 1896, 1917; Pub. L. 94-528, Sec. 1(a), Oct.
17, 1976, 90 Stat. 2483; Pub. L. 95-30, title I, Sec. 101(d)(9),
May 23, 1977, 91 Stat. 134; Pub. L. 95-600, title I, Sec.
113(a)(2)(B), Nov. 6, 1978, 92 Stat. 2778; Pub. L. 97-34, title II,
Sec. 212(d)(2)(D), Aug. 13, 1981, 95 Stat. 239; Pub. L. 98-369,
div. A, title IV, Sec. 474(r)(17), title X, Sec. 1001(b)(8), (e),
July 18, 1984, 98 Stat. 843, 1011, 1012; Pub. L. 99-514, title I,
Sec. 112(b)(2), title III, Sec. 301(b)(6), title VI, Sec.
612(b)(3), Oct. 22, 1986, 100 Stat. 2108, 2217, 2250; Pub. L.
101-239, title VII, Sec. 7811(j)(3), Dec. 19, 1989, 103 Stat. 2411;
Pub. L. 101-508, title XI, Secs. 11801(c)(6)(B), 11812(b)(9), Nov.
5, 1990, 104 Stat. 1388-524, 1388-535; Pub. L. 103-66, title XIII,
Secs. 13113(d)(2), 13261(f)(2), Aug. 10, 1993, 107 Stat. 429, 539;
Pub. L. 104-188, title I, Sec. 1704(t)(8), Aug. 20, 1996, 110 Stat.
1887; Pub. L. 107-134, title I, Sec. 116(a), Jan. 23, 2002, 115
Stat. 2439.)
-MISC1-
AMENDMENTS
2002 - Subsec. (b). Pub. L. 107-134 reenacted heading without
change and amended text of subsec. (b) generally. Prior to
amendment, text read as follows: "An estate shall be allowed a
deduction of $600. A trust which, under its governing instrument,
is required to distribute all of its income currently shall be
allowed a deduction of $300. All other trusts shall be allowed a
deduction of $100. The deductions allowed by this subsection shall
be in lieu of the deductions allowed under section 151 (relating to
deduction for personal exemption)."
1996 - Subsec. (g). Pub. L. 104-188 substituted "under section
2621(a)(2)" for "under 2621(a)(2)".
1993 - Subsec. (c)(4). Pub. L. 103-66, Sec. 13113(d)(2), amended
heading and text of par. (4) generally. Prior to amendment, text
read as follows: "In the case of a trust, the deduction allowed by
this subsection shall be subject to section 681 (relating to
unrelated business income)."
Subsec. (f). Pub. L. 103-66, Sec. 13261(f)(2), substituted
"sections 169 and 197" for "section 169".
1990 - Subsec. (e). Pub. L. 101-508, Sec. 11812(b)(9),
substituted "167(d)" for "167(h)".
Subsec. (f). Pub. L. 101-508, Sec. 11801(c)(6)(B), substituted
"section 169" for "sections 169, 184, 187, and 188".
1989 - Subsec. (g). Pub. L. 101-239 inserted after first sentence
"Rules similar to the rules of the preceding sentence shall apply
to amounts which may be taken into account under 2621(a)(2) or
2622(b)."
1986 - Subsec. (a). Pub. L. 99-514, Sec. 112(b)(2), amended
subsec. (a) generally, substituting "Foreign tax credit allowed"
for "Credits against tax" in heading, striking out designation and
heading for par. (1), and striking out par. (2) which read as
follows: "An estate or trust shall not be allowed the credit
against tax for political contributions provided by section 24."
Subsec. (c)(4). Pub. L. 99-514, Sec. 301(b)(6), in heading,
substituted "Coordination with section 681" for "Adjustments", and
in text struck out first sentence which read as follows: "To the
extent that the amount otherwise allowable as a deduction under
this subsection consists of gain from the sale or exchange of
capital assets held for more than 6 months, proper adjustment shall
be made for any deduction allowable to the estate or trust under
section 1202 (relating to deduction for excess of capital gains
over capital losses)."
Subsec. (j). Pub. L. 99-514, Sec. 612(b)(3), struck out subsec.
(j) which provided a cross reference to section 116(c)(3).
1984 - Subsec. (a)(2). Pub. L. 98-369, Sec. 474(r)(17),
substituted "section 24" for "section 41".
Subsec. (c)(3), (4). Pub. L. 98-369, Sec. 1001(b)(8), (e),
substituted "6 months" for "1 year", applicable to property
acquired after June 22, 1984, and before Jan. 1, 1988. See
Effective Date of 1984 Amendment note below.
1981 - Subsec. (f). Pub. L. 97-34 substituted "and 188" for "188,
and 191".
1978 - Subsecs. (i) to (k). Pub. L. 95-600 redesignated subsecs.
(j) and (k) as (i) and (j), respectively. Former subsec. (i), which
did not allow estates or trusts the deduction for contributions to
candidates for public office provided by section 218, was struck
out.
1977 - Subsec. (k). Pub. L. 95-30 struck out par. (1) which made
a cross reference to section 142(b)(4) for disallowance of the
standard deduction in the case of estates and trusts and struck out
"(2)" at beginning of single remaining cross reference.
1976 - Subsec. (a). Pub. L. 94-455, Sec. 1901(b)(1)(H)(i),
redesignated former pars. (2) and (3) as (1) and (2), respectively.
Former par. (1), relating to the credit against tax for partially
tax-exempt interest, was struck out.
Subsec. (c)(1). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
"or his delegate" after "Secretary".
Subsec. (c)(3), (4). Pub. L. 94-455, Sec. 1402(b)(2), provided
that "9 months" would be changed to "1 year".
Subsec. (c)(3), (4). Pub. L. 94-455, Sec. 1402(b)(1)(J), provided
that "6 months" would be changed to "9 months" for taxable years
beginning in 1977.
Subsecs. (c)(5), (d). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
out "or his delegate" after "Secretary".
Subsec. (f). Pub. L. 94-455, Secs. 1906(b)(13)(A), 1951(c)(2)(B),
2124(a)(3)(B), substituted "sections 169, 184, 187, 188, and 191"
for "sections 168, 169, 184, 187, and 188", and struck out "or his
delegate" after "Secretary".
Subsec. (g). Pub. L. 94-455, Secs. 1906(b)(13)(A), 2009(d),
inserted "(or as an offset against the sales price of property in
determining gain or loss)" after "shall not be allowed as a
deduction", and struck out "or his delegate" after "Secretary".
Subsec. (h). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out "or
his delegate" after "Secretary".
Subsecs. (j), (k). Pub. L. 94-528 added subsec. (j) and
redesignated former subsec. (j) as (k).
1971 - Subsec. (a)(3). Pub. L. 92-178, Sec. 701(b), added par.
(3).
Subsec. (f). Pub. L. 92-178, Sec. 303(c)(4), inserted reference
to section 188.
Subsecs. (i), (j). Pub. L. 92-178, Sec. 702(b), added subsec. (i)
and redesignated former subsec. (i) as (j).
1969 - Subsec. (c). Pub. L. 91-172, Sec. 201(b), designated
existing provisions, with minor changes, as par. (1) and added
pars. (2) to (6).
Subsec. (f). Pub. L. 91-172, Sec. 704(b)(2), struck out reference
to emergency or grain storage facilities both in heading and in
text, and inserted reference to sections 184 and 187 in text.
1966 - Subsec. (g). Pub. L. 89-621 inserted "or of any other
person" after "shall not be allowed as a deduction in computing the
taxable income of the estate".
1964 - Subsec. (a)(3). Pub. L. 88-272, Sec. 201(d)(6)(A), struck
out par. (3) which related to dividends received by individuals.
Subsec. (i). Pub. L. 88-272, Sec. 201(d)(6)(B), designated
existing provisions as par. (1) and added par. (2).
1962 - Subsec. (e). Pub. L. 87-834 substituted a reference to
section 167(h) for a reference to section 167(g).
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-134, title I, Sec. 116(b), Jan. 23, 2002, 115 Stat.
2440, provided that: "The amendment made by this section [amending
this section] shall apply to taxable years ending on or after
September 11, 2001."
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by section 13113(d)(2) of Pub. L. 103-66 applicable to
stock issued after Aug. 10, 1993, see section 13113(e) of Pub. L.
103-66, set out as a note under section 53 of this title.
Amendment by section 13261(f)(2) of Pub. L. 103-66 applicable,
except as otherwise provided, with respect to property acquired
after Aug. 10, 1993, see section 13261(g) of Pub. L. 103-66, set
out as an Effective Date note under section 197 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11812(b)(9) of Pub. L. 101-508 applicable to
property placed in service after Nov. 5, 1990, but not applicable
to any property to which section 168 of this title does not apply
by reason of subsec. (f)(5) of section 168, and not applicable to
rehabilitation expenditures described in section 252(f)(5) of Pub.
L. 99-514, see section 11812(c) of Pub. L. 101-508, set out as a
note under section 42 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101-239 effective, except as otherwise
provided, as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 7817 of Pub. L. 101-239, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 112(b)(2) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 151(a) of
Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 301(b)(6) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 301(c) of
Pub. L. 99-514, set out as a note under section 62 of this title.
Amendment by section 612(b)(3) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 612(c) of
Pub. L. 99-514, set out as a note under section 301 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 474(r)(17) of Pub. L. 98-369 applicable to
taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note
under section 21 of this title.
Amendment by section 1001(b)(8) of Pub. L. 98-369 applicable to
property acquired after June 22, 1984, and before Jan. 1, 1988, see
section 1001(e) of Pub. L. 98-369, set out as a note under section
166 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable to expenditures incurred
after Dec. 31, 1981, in taxable years ending after such date, see
section 212(e) of Pub. L. 97-34, set out as a note under section 46
of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 113(d) of Pub. L. 95-600 provided that: "The amendments
made by this section [amending this section and section 24 of this
title and repealing section 218 of this title] shall apply with
respect to contributions the payment of which is made after
December 31, 1978, in taxable years beginning after such date."
EFFECTIVE DATE OF 1977 AMENDMENT
Amendment by Pub. L. 95-30 applicable to taxable years beginning
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1976 AMENDMENTS
Section 1402(b)(1) of Pub. L. 94-455 provided that the amendment
made by that section is effective with respect to taxable years
beginning in 1977.
Section 1402(b)(2) of Pub. L. 94-455 provided that the amendment
made by that section is effective with respect to taxable years
beginning after Dec. 31, 1977.
Amendment by section 1901(b)(1)(H)(i) of Pub. L. 94-455 effective
for taxable years beginning after Dec. 31, 1976, see section
1901(d) of Pub. L. 94-455, set out as a note under section 2 of
this title.
Amendment by section 1951(c)(2)(B) of Pub. L. 94-455 effective
for taxable years beginning after Dec. 31, 1976, see section
1952(d) of Pub. L. 94-455, set out as a note under section 72 of
this title.
Section 2009(e)(4) of Pub. L. 94-455 provided that: "The
amendment made by subsection (d) [amending this section] shall
apply to taxable years ending after the date of the enactment of
this Act [Oct. 4, 1976]."
Section 2124(a)(4) of Pub. L. 94-455 provided that: "The
amendments made by this subsection [enacting section 191 of this
title and amending this section and sections 1082, 1245, and 1250
of this title] shall apply with respect to additions to capital
account made after June 14, 1976 and before June 15, 1981."
Section 1(b) of Pub. L. 94-528 provided that: "The amendments
made by subsection (a) [amending this section] shall take effect on
October 1, 1977, and shall apply to amounts distributed during
taxable years ending after December 31, 1963."
EFFECTIVE DATE OF 1971 AMENDMENT
Section 303(d) of Pub. L. 92-178 provided that: "The amendments
made by this section [enacting section 188 of this title and
amending this section and sections 57, 1082, 1245, and 1250 of this
title] shall apply to taxable years ending after December 31,
1971."
Section 703 of Pub. L. 92-178 provided that: "The amendments made
by this title [enacting sections 24 and 218 of this title and
amending this section] shall apply to taxable years ending after
December 31, 1971, but only with respect to political
contributions, payment of which is made after such date."
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by section 201(b) of Pub. L. 91-172 applicable with
respect to amounts paid, permanently set aside, or to be used for a
charitable purpose in taxable years beginning after Dec. 31, 1969,
except that subsec. (c)(5) applicable to transfers in trust made
after July 31, 1969, see section 201(g) of Pub. L. 91-172, set out
as a note under section 170 of this title.
Amendment by section 704(b)(2) of Pub. L. 91-172 applicable to
taxable years ending after Dec. 31, 1968, see section 704(c) of
Pub. L. 91-172, set out as an Effective Date note under section 169
of this title.
EFFECTIVE DATE OF 1966 AMENDMENT
Section 2(b) of Pub. L. 89-621 provided that: "The amendment made
by subsection (a) [amending this section] shall apply to taxable
years ending after the date of the enactment of this Act [Oct. 4,
1966], but only with respect to amounts paid or incurred, and
losses sustained, after such date."
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-272 applicable to dividends received
after December 31, 1964, in taxable years ending after such date,
see section 201(e) of Pub. L. 88-272, set out as a note under
section 22 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-834 applicable to taxable years beginning
after Dec. 31, 1961, and ending after Oct. 16, 1962, see section
13(g) of Pub. L. 87-834, set out as an Effective Date note under
section 1245 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 56, 67, 153, 170, 501,
507, 508, 542, 641, 643, 651, 661, 662, 663, 681, 683, 685, 901,
904, 1291, 1298, 2055, 2522, 2652, 4947, 4948, 6034 of this title;
title 15 section 80a-3.
-FOOTNOTE-
(!1) So in original. Probably should be "than".
-End-
-CITE-
26 USC Sec. 643 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart A - General Rules for Taxation of Estates and Trusts
-HEAD-
Sec. 643. Definitions applicable to subparts A, B, C, and D
-STATUTE-
(a) Distributable net income
For purposes of this part, the term "distributable net income"
means, with respect to any taxable year, the taxable income of the
estate or trust computed with the following modifications -
(1) Deduction for distributions
No deduction shall be taken under sections 651 and 661
(relating to additional deductions).
(2) Deduction for personal exemption
No deduction shall be taken under section 642(b) (relating to
deduction for personal exemptions).
(3) Capital gains and losses
Gains from the sale or exchange of capital assets shall be
excluded to the extent that such gains are allocated to corpus
and are not (A) paid, credited, or required to be distributed to
any beneficiary during the taxable year, or (B) paid, permanently
set aside, or to be used for the purposes specified in section
642(c). Losses from the sale or exchange of capital assets shall
be excluded, except to the extent such losses are taken into
account in determining the amount of gains from the sale or
exchange of capital assets which are paid, credited, or required
to be distributed to any beneficiary during the taxable year. The
exclusion under section 1202 shall not be taken into account.
(4) Extraordinary dividends and taxable stock dividends
For purposes only of subpart B (relating to trusts which
distribute current income only), there shall be excluded those
items of gross income constituting extraordinary dividends or
taxable stock dividends which the fiduciary, acting in good
faith, does not pay or credit to any beneficiary by reason of his
determination that such dividends are allocable to corpus under
the terms of the governing instrument and applicable local law.
(5) Tax-exempt interest
There shall be included any tax-exempt interest to which
section 103 applies, reduced by any amounts which would be
deductible in respect of disbursements allocable to such interest
but for the provisions of section 265 (relating to disallowance
of certain deductions).
(6) Income of foreign trust
In the case of a foreign trust -
(A) There shall be included the amounts of gross income from
sources without the United States, reduced by any amounts which
would be deductible in respect of disbursements allocable to
such income but for the provisions of section 265(a)(1)
(relating to disallowance of certain deductions).
(B) Gross income from sources within the United States shall
be determined without regard to section 894 (relating to income
exempt under treaty).
(C) Paragraph (3) shall not apply to a foreign trust. In the
case of such a trust, there shall be included gains from the
sale or exchange of capital assets, reduced by losses from such
sales or exchanges to the extent such losses do not exceed
gains from such sales or exchanges.
(7) Abusive transactions
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this part,
including regulations to prevent avoidance of such purposes.
If the estate or trust is allowed a deduction under section 642(c),
the amount of the modifications specified in paragraphs (5) and (6)
shall be reduced to the extent that the amount of income which is
paid, permanently set aside, or to be used for the purposes
specified in section 642(c) is deemed to consist of items specified
in those paragraphs. For this purpose, such amount shall (in the
absence of specific provisions in the governing instrument) be
deemed to consist of the same proportion of each class of items of
income of the estate or trust as the total of each class bears to
the total of all classes.
(b) Income
For purposes of this subpart and subparts B, C, and D, the term
"income", when not preceded by the words "taxable", "distributable
net", "undistributed net", or "gross", means the amount of income
of the estate or trust for the taxable year determined under the
terms of the governing instrument and applicable local law. Items
of gross income constituting extraordinary dividends or taxable
stock dividends which the fiduciary, acting in good faith,
determines to be allocable to corpus under the terms of the
governing instrument and applicable local law shall not be
considered income.
(c) Beneficiary
For purposes of this part, the term "beneficiary" includes heir,
legatee, devisee.
(d) Coordination with back-up withholding
Except to the extent otherwise provided in regulations, this
subchapter shall be applied with respect to payments subject to
withholding under section 3406 -
(1) by allocating between the estate or trust and its
beneficiaries any credit allowable under section 31(c) (on the
basis of their respective shares of any such payment taken into
account under this subchapter),
(2) by treating each beneficiary to whom such credit is
allocated as if an amount equal to such credit has been paid to
him by the estate or trust, and
(3) by allowing the estate or trust a deduction in an amount
equal to the credit so allocated to beneficiaries.
(e) Treatment of property distributed in kind
(1) Basis of beneficiary
The basis of any property received by a beneficiary in a
distribution from an estate or trust shall be -
(A) the adjusted basis of such property in the hands of the
estate or trust immediately before the distribution, adjusted
for
(B) any gain or loss recognized to the estate or trust on the
distribution.
(2) Amount of distribution
In the case of any distribution of property (other than cash),
the amount taken into account under sections 661(a)(2) and
662(a)(2) shall be the lesser of -
(A) the basis of such property in the hands of the
beneficiary (as determined under paragraph (1)), or
(B) the fair market value of such property.
(3) Election to recognize gain
(A) In general
In the case of any distribution of property (other than cash)
to which an election under this paragraph applies -
(i) paragraph (2) shall not apply,
(ii) gain or loss shall be recognized by the estate or
trust in the same manner as if such property had been sold to
the distributee at its fair market value, and
(iii) the amount taken into account under sections
661(a)(2) and 662(a)(2) shall be the fair market value of
such property.
(B) Election
Any election under this paragraph shall apply to all
distributions made by the estate or trust during a taxable year
and shall be made on the return of such estate or trust for
such taxable year.
Any such election, once made, may be revoked only with the
consent of the Secretary.
(4) Exception for distributions described in section 663(a)
This subsection shall not apply to any distribution described
in section 663(a).
(f) Treatment of multiple trusts
For purposes of this subchapter, under regulations prescribed by
the Secretary, 2 or more trusts shall be treated as 1 trust if -
(1) such trusts have substantially the same grantor or grantors
and substantially the same primary beneficiary or beneficiaries,
and
(2) a principal purpose of such trusts is the avoidance of the
tax imposed by this chapter.
For purposes of the preceding sentence, a husband and wife shall be
treated as 1 person.
(g) Certain payments of estimated tax treated as paid by
beneficiary
(1) In general
In the case of a trust -
(A) the trustee may elect to treat any portion of a payment
of estimated tax made by such trust for any taxable year of the
trust as a payment made by a beneficiary of such trust,
(B) any amount so treated shall be treated as paid or
credited to the beneficiary on the last day of such taxable
year, and
(C) for purposes of subtitle F, the amount so treated -
(i) shall not be treated as a payment of estimated tax made
by the trust, but
(ii) shall be treated as a payment of estimated tax made by
such beneficiary on January 15 following the taxable year.
(2) Time for making election
An election under paragraph (1) shall be made on or before the
65th day after the close of the taxable year of the trust and in
such manner as the Secretary may prescribe.
(3) Extension to last year of estate
In the case of a taxable year reasonably expected to be the
last taxable year of an estate -
(A) any reference in this subsection to a trust shall be
treated as including a reference to an estate, and
(B) the fiduciary of the estate shall be treated as the
trustee.
(h) Distributions by certain foreign trusts through nominees
For purposes of this part, any amount paid to a United States
person which is derived directly or indirectly from a foreign trust
of which the payor is not the grantor shall be deemed in the year
of payment to have been directly paid by the foreign trust to such
United States person.
(i) Loans from foreign trusts
For purposes of subparts B, C, and D -
(1) General rule
Except as provided in regulations, if a foreign trust makes a
loan of cash or marketable securities directly or indirectly to -
(A) any grantor or beneficiary of such trust who is a United
States person, or
(B) any United States person not described in subparagraph
(A) who is related to such grantor or beneficiary,
the amount of such loan shall be treated as a distribution by
such trust to such grantor or beneficiary (as the case may be).
(2) Definitions and special rules
For purposes of this subsection -
(A) Cash
The term "cash" includes foreign currencies and cash
equivalents.
(B) Related person
(i) In general
A person is related to another person if the relationship
between such persons would result in a disallowance of losses
under section 267 or 707(b). In applying section 267 for
purposes of the preceding sentence, section 267(c)(4) shall
be applied as if the family of an individual includes the
spouses of the members of the family.
(ii) Allocation
If any person described in paragraph (1)(B) is related to
more than one person, the grantor or beneficiary to whom the
treatment under this subsection applies shall be determined
under regulations prescribed by the Secretary.
(C) Exclusion of tax-exempts
The term "United States person" does not include any entity
exempt from tax under this chapter.
(D) Trust not treated as simple trust
Any trust which is treated under this subsection as making a
distribution shall be treated as not described in section 651.
(3) Subsequent transactions regarding loan principal
If any loan is taken into account under paragraph (1), any
subsequent transaction between the trust and the original
borrower regarding the principal of the loan (by way of complete
or partial repayment, satisfaction, cancellation, discharge, or
otherwise) shall be disregarded for purposes of this title.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 217; Pub. L. 87-834, Sec. 7(a),
Oct. 16, 1962, 76 Stat. 985; Pub. L. 94-455, title X, Sec. 1013(c),
(e)(2), Oct. 4, 1976, 90 Stat. 1615, 1616; Pub. L. 96-223, title
IV, Sec. 404(b)(4), Apr. 2, 1980, 94 Stat. 306; Pub. L. 97-34,
title III, Sec. 301(b)(4), (6)(B), Aug. 13, 1981, 95 Stat. 270;
Pub. L. 97-248, title III, Secs. 302(b)(1), 308(a), Sept. 3, 1982,
96 Stat. 586, 591; Pub. L. 97-448, title I, Sec. 103(a)(3), Jan.
12, 1983, 96 Stat. 2375; Pub. L. 98-67, title I, Sec. 102(a), Aug.
5, 1983, 97 Stat. 369; Pub. L. 98-369, div. A, title I, Secs.
81(a), 82(a), title VII, Sec. 722(h)(3), July 18, 1984, 98 Stat.
597, 598, 975; Pub. L. 99-514, title III, Sec. 301(b)(7), title VI,
Sec. 612(b)(4), title XIV, Sec. 1404(b), title XVIII, Sec. 1806(a),
(c), Oct. 22, 1986, 100 Stat. 2217, 2250, 2713, 2810, 2811; Pub. L.
100-647, title I, Sec. 1014(d)(3), (4), Nov. 10, 1988, 102 Stat.
3561; Pub. L. 101-239, title VII, Sec. 7811(b), (f)(1), Dec. 19,
1989, 103 Stat. 2406, 2409; Pub. L. 103-66, title XIII, Sec.
13113(d)(3), Aug. 10, 1993, 107 Stat. 430; Pub. L. 104-188, title
I, Secs. 1904(c)(1), 1906(b), (c)(1), Aug. 20, 1996, 110 Stat.
1912, 1915.)
-MISC1-
AMENDMENTS
1996 - Subsec. (a)(7). Pub. L. 104-188, Sec. 1906(b), added par.
(7).
Subsec. (h). Pub. L. 104-188, Sec. 1904(c)(1), added subsec. (h).
Subsec. (i). Pub. L. 104-188, Sec. 1906(c)(1), added subsec. (i).
1993 - Subsec. (a)(3). Pub. L. 103-66 inserted at end "The
exclusion under section 1202 shall not be taken into account."
1989 - Subsec. (a)(6)(A). Pub. L. 101-239, Sec. 7811(f)(1),
substituted "section 265(a)(1)" for "section 265(1)".
Subsec. (a)(6)(C). Pub. L. 101-239, Sec. 7811(b)(1), struck out
"(i)" after "such a trust," and ", and (ii) the deduction under
section 1202 (relating to deduction for excess of capital gains
over capital losses) shall not be taken into account" before period
at end.
Subsec. (a)(6)(D). Pub. L. 101-239, Sec. 7811(b)(2), struck out
subpar. (D) which read as follows: "Effective for distributions
made in taxable years beginning after December 31, 1975, the
undistributed net income of each foreign trust for each taxable
year beginning on or before December 31, 1975, remaining
undistributed at the close of the last taxable year beginning on or
before December 31, 1975, shall be redetermined by taking into
account the deduction allowed by section 1202."
1988 - Subsec. (g)(1). Pub. L. 100-647, Sec. 1014(d)(3)(A),
struck out at end "The preceding sentence shall apply only to the
extent the payments of estimated tax made by the trust for the
taxable year exceed the tax imposed by this chapter shown on its
return for the taxable year."
Subsec. (g)(2). Pub. L. 100-647, Sec. 1014(d)(3)(B), amended par.
(2) generally. Prior to amendment, par. (2) read as follows: "An
election under paragraph (1) may be made -
"(A) only on the trust's return of the tax imposed by this
chapter for the taxable year, and
"(B) only if such return is filed on or before the 65th day
after the close of the taxable year."
Subsec. (g)(3). Pub. L. 100-647, Sec. 1014(d)(4), added par. (3).
1986 - Subsec. (a)(3). Pub. L. 99-514, Sec. 301(b)(7), struck out
"The deduction under section 1202 (relating to deduction for excess
of capital gains over capital losses) shall not be taken into
account."
Subsec. (a)(7). Pub. L. 99-514, Sec. 612(b)(4), struck out par.
(7), dividends or interest, which read as follows: "There shall be
included the amount of any dividends or interest excluded from
gross income pursuant to section 116 (relating to partial exclusion
of dividends) or section 128 (relating to certain interest)."
Subsec. (d). Pub. L. 99-514, Sec. 1806(c)(1), redesignated
subsec. (d), relating to treatment of property distributed in kind,
as (e). Former subsec. (e) redesignated (f).
Subsec. (e). Pub. L. 99-514, Sec. 1806(a), (c)(1), redesignated
subsec. (d) relating to treatment of property distributed in kind
as (e) and amended par. (3)(B) generally, substituting "shall apply
to all distributions made by the estate or trust during a taxable
year and shall be made on the return of such estate or trust for
such taxable year" for "shall be made by the estate or trust on its
return for the taxable year for which the distribution was made".
Former subsec. (e) redesignated (f).
Subsec. (f). Pub. L. 99-514, Sec. 1806(c)(2), redesignated
subsec. (e) as (f).
Subsec. (g). Pub. L. 99-514, Sec. 1404(b), added subsec. (g).
1984 - Subsec. (d). Pub. L. 98-369, Sec. 81(a), added subsec. (d)
relating to treatment of property distributed in kind.
Pub. L. 98-369, Sec. 722(h)(3), added subsec. (d) relating to
coordination with back-up withholding.
Subsec. (e). Pub. L. 98-369, Sec. 82(a), added subsec. (e).
1983 - Subsec. (a)(7). Pub. L. 97-448 substituted "section 116
(relating to partial exclusion of dividends) or section 128
(relating to certain interest)" for "section 116 (relating to
partial exclusion of dividends or interest received) or section 128
(relating to interest on certain savings certificates)".
Subsec. (d). Pub. L. 98-67 repealed amendments made by Pub. L.
97-248. See 1982 Amendment note below.
1982 - Subsec. (d). Pub. L. 97-248 provided that, applicable to
payments of interest, dividends, and patronage dividends paid or
credited after June 30, 1983, this section is amended by adding
subsec. (d) relating to coordination with withholding on interest
and dividends. Section 102(a), (b) of Pub. L. 98-67, title I, Aug.
5, 1983, 97 Stat. 369, repealed subtitle A (Secs. 301-308) of title
III of Pub. L. 97-248 as of the close of June 30, 1983, and
provided that the Internal Revenue Code of 1954 (this title) shall
be applied and administered (subject to certain exceptions) as if
such subtitle A (and the amendments made by such subtitle A) had
not been enacted.
1981 - Subsec. (a)(7). Pub. L. 97-34, Sec. 301(b)(6)(A), inserted
reference to "interest" in heading and text, which continued the
amendment made by Pub. L. 96-223.
Pub. L. 97-34, Sec. 301(b)(4), inserted "or section 128 (relating
to interest on certain savings certificates)" after "received)".
1980 - Subsec. (a)(7). Pub. L. 96-223 inserted "or interest"
after "dividends" in heading and text.
1976 - Subsec. (a)(6)(C). Pub. L. 94-455, Sec. 1013(c)(1), struck
out "created by a United States person" after "foreign trust".
Subsec. (a)(6)(D). Pub. L. 94-455, Sec. 1013(c)(2), added subpar.
(D).
Subsec. (d). Pub. L. 94-455, Sec. 1013(e)(2), struck out subsec.
(a) which defined a foreign trust created by a United States
person.
1962 - Subsec. (a)(6). Pub. L. 87-834, Sec. 7(a)(1), substituted
"Income of foreign trust" for "Foreign income" in heading,
designated existing provisions as subpar. (A), and added subpars.
(B) and (C).
Subsec. (d). Pub. L. 87-834, Sec. 7(a)(2), added subsec. (d).
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1904(d) of Pub. L. 104-188 provided that:
"(1) In general. - Except as provided by paragraph (2), the
amendments made by this section [amending this section and sections
665, 672, and 901 of this title] shall take effect on the date of
the enactment of this Act [Aug. 20, 1996].
"(2) Exception for certain trusts. - The amendments made by this
section shall not apply to any trust -
"(A) which is treated as owned by the grantor under section 676
or 677 (other than subsection (a)(3) thereof) of the Internal
Revenue Code of 1986, and
"(B) which is in existence on September 19, 1995.
The preceding sentence shall not apply to the portion of any such
trust attributable to any transfer to such trust after September
19, 1995."
Section 1906(d)(2), (3) of Pub. L. 104-188 provided that:
"(2) Abusive transactions. - The amendment made by subsection (b)
[amending this section] shall take effect on the date of the
enactment of this Act [Aug. 20, 1996].
"(3) Loans from trusts. - The amendment made by subsection (c)
[amending this section and section 7872 of this title] shall apply
to loans of cash or marketable securities made after September 19,
1995."
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103-66 applicable to stock issued after Aug.
10, 1993, see section 13113(e) of Pub. L. 103-66, set out as a note
under section 53 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101-239 effective, except as otherwise
provided, as if included in the provision of the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such
amendment relates, see section 7817 of Pub. L. 101-239, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 301(b)(7) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 301(c) of
Pub. L. 99-514, set out as a note under section 62 of this title.
Amendment by section 612(b)(4) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 612(c) of
Pub. L. 99-514, set out as a note under section 301 of this title.
Section 1404(d) of Pub. L. 99-514 provided that: "The amendments
made by this section [amending this section and sections 6215,
6601, and 6654 of this title and repealing section 6152 of this
title] shall apply to taxable years beginning after December 31,
1986."
Amendment by section 1806(a), (c) of Pub. L. 99-514 effective,
except as otherwise provided, as if included in the provisions of
the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such
amendment relates, see section 1881 of Pub. L. 99-514, set out as a
note under section 48 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Section 81(b) of Pub. L. 98-369, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - The amendment made by subsection (a) [amending
this section] shall apply to distributions after June 1, 1984, in
taxable years ending after such date.
"(2) Time for making election. - In the case of any distribution
before the date of the enactment of this Act [July 18, 1984] -
"(A) the time for making an election under section 643(d)(3) of
the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as
added by this section) shall not expire before January 1, 1985,
and
"(B) the requirement that such election be made on the return
of the estate or trust shall not apply."
Section 82(b) of Pub. L. 98-369, as amended by Pub. L. 99-514,
title XVIII, Sec. 1806(b), Oct. 22, 1986, 100 Stat. 2811, provided
that: "The amendment made by subsection (a) [amending this section]
shall apply to taxable years beginning after March 1, 1984; except
that, in the case of a trust which was irrevocable on March 1,
1984, such amendment shall so apply only to that portion of the
trust which is attributable to contributions to corpus after March
1, 1984."
Section 722(h)(5) of Pub. L. 98-369 provided that:
"(A) Except as provided in this paragraph, the amendments made by
this subsection [amending this section and sections 3405, 3406, and
6041 of this title] shall apply as if included in the amendments
made by the Interest and Dividend Tax Compliance Act of 1983 [Pub.
L. 98-67].
"(B) The amendments made by paragraph (4) [amending sections 3405
and 6041 of this title] shall apply to payments or distributions
after December 31, 1984, unless the payor elects to have such
amendments apply to payments or distributions before January 1,
1985."
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 301(b)(4) of Pub. L. 97-34 applicable to
taxable years ending after Sept. 30, 1981, and amendment by section
301(b)(6)(A) of Pub. L. 97-34 applicable to taxable years beginning
after Dec. 31, 1981, see section 301(d) of Pub. L. 97-34, set out
as a note under section 265 of this title.
EFFECTIVE AND TERMINATION DATES OF 1980 AMENDMENT
Amendment by Pub. L. 96-223 applicable with respect to taxable
years beginning after Dec. 31, 1980, and before Jan. 1, 1982, see
section 404(c) of Pub. L. 96-223, set out as a note under section
265 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
For effective date of amendment by section 1013(e)(2) of Pub. L.
94-455, see section 1013(f)(1) of Pub. L. 94-455, set out as an
Effective Date note under section 679 of this title.
Section 1013(f)(2) of Pub. L. 94-455 provided that: "The
amendments made by subsection (c) [amending this section] shall
apply to taxable years beginning after December 31, 1975."
EFFECTIVE DATE OF 1962 AMENDMENT
Section 7(j) of Pub. L. 87-834 provided that: "The amendments
made by this section [amending this section and sections 665, 666,
and 668 of this title and enacting section 669 of this title]
(other than by subsections (f), (g) and (h) [enacting sections 6048
and 6677 of this title and amending section 7701 of this title]),
shall apply with respect to distributions made after December 31,
1962."
TREATMENT AS SINGLE TRUST
Section 1018(e) of Pub. L. 100-647 provided that: "If -
"(1) on a return for the 1st taxable year of the trusts
involved beginning after March 1, 1984, 2 or more trusts were
treated as a single trust for purposes of the tax imposed by
chapter 1 of the Internal Revenue Code of 1954 [now 1986],
"(2) such trusts would have been required to be so treated but
for the amendment made by section 1806(b) of the Reform Act [Pub.
L. 99-514, which amended provisions set out as an Effective Date
of 1984 Amendment note above], and
"(3) such trusts did not accumulate any income during such
taxable year and did not make any accumulation distributions
during such taxable year,
then, notwithstanding the amendment made by section 1806(b) of the
Reform Act, such trusts shall be treated as one trust for purposes
of such taxable year."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 646, 665, 679, 1361,
2056A, 6166, 7872 of this title.
-End-
-CITE-
26 USC Sec. 644 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart A - General Rules for Taxation of Estates and Trusts
-HEAD-
Sec. 644. Taxable year of trusts
-STATUTE-
(a) In general
For purposes of this subtitle, the taxable year of any trust
shall be the calendar year.
(b) Exception for trusts exempt from tax and charitable trusts
Subsection (a) shall not apply to a trust exempt from taxation
under section 501(a) or to a trust described in section 4947(a)(1).
-SOURCE-
(Added Pub. L. 99-514, title XIV, Sec. 1403(a), Oct. 22, 1986, 100
Stat. 2713, Sec. 645; renumbered Sec. 644, Pub. L. 105-34, title V,
Sec. 507(b)(1), Aug. 5, 1997, 111 Stat. 856.)
-MISC1-
PRIOR PROVISIONS
A prior section 644, added Pub. L. 94-455, title VII, Sec.
701(e)(1), Oct. 4, 1976, 90 Stat. 1578; amended Pub. L. 95-600,
title VII, Sec. 701(p)(1)-(3), Nov. 6, 1978, 92 Stat. 2908; Pub. L.
96-471, Sec. 2(b)(4), Oct. 19, 1980, 94 Stat. 2254; Pub. L. 99-514,
title XV, Sec. 1511(c)(5), Oct. 22, 1986, 100 Stat. 2745, related
to special rule for gain on property transferred to trust at less
than fair market value, prior to repeal by Pub. L. 105-34, title V,
Sec. 507(b)(1), Aug. 5, 1997, 111 Stat. 856.
AMENDMENTS
1997 - Pub. L. 105-34 renumbered section 645 of this title as
this section.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 507(c)(2) of Pub. L. 105-34 provided that: "The
amendments made by subsection (b) [amending section 706 of this
title, repealing section 644 of this title, and renumbering section
645 of this title as this section] shall apply to sales or
exchanges after the date of the enactment of this Act [Aug. 5,
1997]."
EFFECTIVE DATE; TRANSITION RULE
Section 1403(c) of Pub. L. 99-514 provided that:
"(1) Effective date. - The amendments made by this section
[enacting this section] shall apply to taxable years beginning
after December 31, 1986.
"(2) Transition rule. - With respect to any trust beneficiary who
is required to include in gross income amounts under sections
652(a) or 662(a) of the Internal Revenue Code of 1986 in the 1st
taxable year of the beneficiary beginning after December 31, 1986,
by reason of any short taxable year of the trust required by the
amendments made by this section, such income shall be ratably
included in the income of the trust beneficiary over the 4-taxable
year period beginning with such taxable year."
APPLICATION OF TRANSITION RULES TO TRUST BENEFICIARIES TO WHICH
SECTION 664 APPLIES
Pub. L. 100-647, title I, Sec. 1014(c), Nov. 10, 1988, 102 Stat.
3559, provided that:
"(1) If a beneficiary of a trust to which section 664 of the 1986
Code applies elects (at such time and in such manner as the
Secretary of the Treasury or his delegate may prescribe) to have
this paragraph apply, such beneficiary shall be entitled to the
benefits of section 1403(c)(2) of the Reform Act [Pub. L. 99-514,
set out as an Effective Date; Transition Rule note above] with
respect to amounts included in gross income under section 664(b) of
the 1986 Code in the same manner as if such amounts were included
in gross income under section 652(a) of the 1986 Code.
"(2) Any trust beneficiary may elect (at such time and in such
manner as the Secretary of the Treasury or his delegate may
prescribe) to waive the benefits of section 1403(c)(2) of the
Reform Act.
"(3)(A) For purposes of determining the gross income of any
pass-thru entity, such pass-thru entity shall not be allowed the
benefits of section 806(e)(2)(C) [Pub. L. 99-514, set out as an
Effective Date of 1986 Amendment note under section 1378 of this
title] (other than with respect to income from a common trust fund)
or 1403(c)(2) of the Reform Act if such pass-thru entity is
required to change its taxable year by reason of the amendments
made by section 806 or 1403 of the Reform Act [Pub. L. 99-514,
which enacted this section and amended sections 267, 441, 706, and
1378 of this title].
"(B) For purposes of subparagraph (A), the term 'pass-thru
entity' means any trust, partnership, S corporation, or common
trust fund.
"(4) If any trust was required to change its taxable year by the
amendments made by section 1403 of the Reform Act [Pub. L. 99-514,
which enacted this section], such change shall be treated as
initiated by such trust and approved by the Secretary of the
Treasury or his delegate."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 706 of this title.
-End-
-CITE-
26 USC Sec. 645 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart A - General Rules for Taxation of Estates and Trusts
-HEAD-
Sec. 645. Certain revocable trusts treated as part of estate
-STATUTE-
(a) General rule
For purposes of this subtitle, if both the executor (if any) of
an estate and the trustee of a qualified revocable trust elect the
treatment provided in this section, such trust shall be treated and
taxed as part of such estate (and not as a separate trust) for all
taxable years of the estate ending after the date of the decedent's
death and before the applicable date.
(b) Definitions
For purposes of subsection (a) -
(1) Qualified revocable trust
The term "qualified revocable trust" means any trust (or
portion thereof) which was treated under section 676 as owned by
the decedent of the estate referred to in subsection (a) by
reason of a power in the grantor (determined without regard to
section 672(e)).
(2) Applicable date
The term "applicable date" means -
(A) if no return of tax imposed by chapter 11 is required to
be filed, the date which is 2 years after the date of the
decedent's death, and
(B) if such a return is required to be filed, the date which
is 6 months after the date of the final determination of the
liability for tax imposed by chapter 11.
(c) Election
The election under subsection (a) shall be made not later than
the time prescribed for filing the return of tax imposed by this
chapter for the first taxable year of the estate (determined with
regard to extensions) and, once made, shall be irrevocable.
-SOURCE-
(Added Pub. L. 105-34, title XIII, Sec. 1305(a), Aug. 5, 1997, 111
Stat. 1040, Sec. 646; renumbered Sec. 645, Pub. L. 105-206, title
VI, Sec. 6013(a)(1), July 22, 1998, 112 Stat. 819.)
-MISC1-
PRIOR PROVISIONS
A prior section 645 was renumbered section 644 of this title.
AMENDMENTS
1998 - Pub. L. 105-206 renumbered section 646 of this title as
this section.
EFFECTIVE DATE
Section 1305(d) of Pub. L. 105-34 provided that: "The amendments
made by this section [enacting this section and amending section
2652 of this title] shall apply with respect to estates of
decedents dying after the date of the enactment of this Act [Aug.
5, 1997]."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 121, 1022, 2654, 7491 of
this title.
-End-
-CITE-
26 USC Sec. 646 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart A - General Rules for Taxation of Estates and Trusts
-HEAD-
Sec. 646. Tax treatment of electing Alaska Native Settlement Trusts
-STATUTE-
(a) In general
If an election under this section is in effect with respect to
any Settlement Trust, the provisions of this section shall apply in
determining the income tax treatment of the Settlement Trust and
its beneficiaries with respect to the Settlement Trust.
(b) Taxation of income of trust
Except as provided in subsection (f)(1)(B)(ii) -
(1) In general
There is hereby imposed on the taxable income of an electing
Settlement Trust, other than its net capital gain, a tax at the
lowest rate specified in section 1(c).
(2) Capital gain
In the case of an electing Settlement Trust with a net capital
gain for the taxable year, a tax is hereby imposed on such gain
at the rate of tax which would apply to such gain if the taxpayer
were subject to a tax on its other taxable income at only the
lowest rate specified in section 1(c).
Any such tax shall be in lieu of the income tax otherwise imposed
by this chapter on such income or gain.
(c) One-time election
(1) In general
A Settlement Trust may elect to have the provisions of this
section apply to the trust and its beneficiaries.
(2) Time and method of election
An election under paragraph (1) shall be made by the trustee of
such trust -
(A) on or before the due date (including extensions) for
filing the Settlement Trust's return of tax for the first
taxable year of such trust ending after the date of the
enactment of this section, and
(B) by attaching to such return of tax a statement
specifically providing for such election.
(3) Period election in effect
Except as provided in subsection (f), an election under this
subsection -
(A) shall apply to the first taxable year described in
paragraph (2)(A) and all subsequent taxable years, and
(B) may not be revoked once it is made.
(d) Contributions to trust
(1) Beneficiaries of electing trust not taxed on contributions
In the case of an electing Settlement Trust, no amount shall be
includible in the gross income of a beneficiary of such trust by
reason of a contribution to such trust.
(2) Earnings and profits
The earnings and profits of the sponsoring Native Corporation
shall not be reduced on account of any contribution to such
Settlement Trust.
(e) Tax treatment of distributions to beneficiaries
Amounts distributed by an electing Settlement Trust during any
taxable year shall be considered as having the following
characteristics in the hands of the recipient beneficiary:
(1) First, as amounts excludable from gross income for the
taxable year to the extent of the taxable income of such trust
for such taxable year (decreased by any income tax paid by the
trust with respect to the income) plus any amount excluded from
gross income of the trust under section 103.
(2) Second, as amounts excludable from gross income to the
extent of the amount described in paragraph (1) for all taxable
years for which an election is in effect under subsection (c)
with respect to the trust, and not previously taken into account
under paragraph (1).
(3) Third, as amounts distributed by the sponsoring Native
Corporation with respect to its stock (within the meaning of
section 301(a)) during such taxable year and taxable to the
recipient beneficiary as amounts described in section 301(c)(1),
to the extent of current or accumulated earnings and profits of
the sponsoring Native Corporation as of the close of such taxable
year after proper adjustment is made for all distributions made
by the sponsoring Native Corporation during such taxable year.
(4) Fourth, as amounts distributed by the trust in excess of
the distributable net income of such trust for such taxable year.
Amounts distributed to which paragraph (3) applies shall not be
treated as a corporate distribution subject to section 311(b), and
for purposes of determining the amount of a distribution for
purposes of paragraph (3) and the basis to the recipients, section
643(e) and not section 301(b) or (d) shall apply.
(f) Special rules where transfer restrictions modified
(1) Transfer of beneficial interests
If, at any time, a beneficial interest in an electing
Settlement Trust may be disposed of to a person in a manner which
would not be permitted by section 7(h) of the Alaska Native
Claims Settlement Act (43 U.S.C. 1606(h)) if such interest were
Settlement Common Stock -
(A) no election may be made under subsection (c) with respect
to such trust, and
(B) if such an election is in effect as of such time -
(i) such election shall cease to apply as of the first day
of the taxable year in which such disposition is first
permitted,
(ii) the provisions of this section shall not apply to such
trust for such taxable year and all taxable years thereafter,
and
(iii) the distributable net income of such trust shall be
increased by the current or accumulated earnings and profits
of the sponsoring Native Corporation as of the close of such
taxable year after proper adjustment is made for all
distributions made by the sponsoring Native Corporation
during such taxable year.
In no event shall the increase under clause (iii) exceed the fair
market value of the trust's assets as of the date the beneficial
interest of the trust first becomes so disposable. The earnings
and profits of the sponsoring Native Corporation shall be
adjusted as of the last day of such taxable year by the amount of
earnings and profits so included in the distributable net income
of the trust.
(2) Stock in corporation
If -
(A) stock in the sponsoring Native Corporation may be
disposed of to a person in a manner which would not be
permitted by section 7(h) of the Alaska Native Claims
Settlement Act (43 U.S.C. 1606(h)) if such stock were
Settlement Common Stock, and
(B) at any time after such disposition of stock is first
permitted, such corporation transfers assets to a Settlement
Trust,
paragraph (1)(B) shall be applied to such trust on and after the
date of the transfer in the same manner as if the trust permitted
dispositions of beneficial interests in the trust in a manner not
permitted by such section 7(h).
(3) Certain distributions
For purposes of this section, the surrender of an interest in a
Native Corporation or an electing Settlement Trust in order to
accomplish the whole or partial redemption of the interest of a
shareholder or beneficiary in such corporation or trust, or to
accomplish the whole or partial liquidation of such corporation
or trust, shall be deemed to be a transfer permitted by section
7(h) of the Alaska Native Claims Settlement Act.
(g) Taxable income
For purposes of this title, the taxable income of an electing
Settlement Trust shall be determined under section 641(b) without
regard to any deduction under section 651 or 661.
(h) Definitions
For purposes of this section -
(1) Electing Settlement Trust
The term "electing Settlement Trust" means a Settlement Trust
which has made the election, effective for a taxable year,
described in subsection (c).
(2) Native Corporation
The term "Native Corporation" has the meaning given such term
by section 3(m) of the Alaska Native Claims Settlement Act (43
U.S.C. 1602(m)).
(3) Settlement Common Stock
The term "Settlement Common Stock" has the meaning given such
term by section 3(p) of the Alaska Native Claims Settlement Act
(43 U.S.C. 1602(p)).
(4) Settlement Trust
The term "Settlement Trust" means a trust that constitutes a
settlement trust under section 3(t) of the Alaska Native Claims
Settlement Act (43 U.S.C. 1602(t)).
(5) Sponsoring Native Corporation
The term "sponsoring Native Corporation" means the Native
Corporation which transfers assets to an electing Settlement
Trust.
(i) Special loss disallowance rule
Any loss that would otherwise be recognized by a shareholder upon
a disposition of a share of stock of a sponsoring Native
Corporation shall be reduced (but not below zero) by the per share
loss adjustment factor. The per share loss adjustment factor shall
be the aggregate of all contributions to all electing Settlement
Trusts sponsored by such Native Corporation made on or after the
first day each trust is treated as an electing Settlement Trust
expressed on a per share basis and determined as of the day of each
such contribution.
(j) Cross reference
For information required with respect to electing Settlement
Trusts and sponsoring Native Corporations, see section 6039H.
-SOURCE-
(Added Pub. L. 107-16, title VI, Sec. 671(a), June 7, 2001, 115
Stat. 144.)
-STATAMEND-
TERMINATION OF SECTION
For termination of section by section 901 of Pub. L. 107-16, see
Effective and Termination Dates note below.
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of this section, referred to in subsec.
(c)(2)(A), is the date of enactment of Pub. L. 107-16, which was
approved June 7, 2001.
-MISC1-
PRIOR PROVISIONS
A prior section 646 was renumbered section 645 of this title.
EFFECTIVE AND TERMINATION DATES
Pub. L. 107-16, title VI, Sec. 671(d), June 7, 2001, 115 Stat.
148, provided that: "The amendments made by this section [enacting
this section and section 6039H of this title] shall apply to
taxable years ending after the date of the enactment of this Act
[June 7, 2001] and to contributions made to electing Settlement
Trusts for such year or any subsequent year."
Section inapplicable to taxable, plan, or limitation years
beginning after Dec. 31, 2010, and the Internal Revenue Code of
1986 to be applied and administered to such years as if it had
never been enacted, see section 901 of Pub. L. 107-16, set out as
an Effective and Termination Dates of 2001 Amendment note under
section 1 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 6039H of this title.
-End-
-CITE-
26 USC Subpart B - Trusts Which Distribute Current Income
Only 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart B - Trusts Which Distribute Current Income Only
-HEAD-
SUBPART B - TRUSTS WHICH DISTRIBUTE CURRENT INCOME ONLY
-MISC1-
Sec.
651. Deduction for trusts distributing current income only.
652. Inclusion of amounts in gross income of beneficiaries
of trusts distributing current income only.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in sections 643, 665, 671, 685, 1312
of this title.
-End-
-CITE-
26 USC Sec. 651 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart B - Trusts Which Distribute Current Income Only
-HEAD-
Sec. 651. Deduction for trusts distributing current income only
-STATUTE-
(a) Deduction
In the case of any trust the terms of which -
(1) provide that all of its income is required to be
distributed currently, and
(2) do not provide that any amounts are to be paid, permanently
set aside, or used for the purposes specified in section 642(c)
(relating to deduction for charitable, etc., purposes),
there shall be allowed as a deduction in computing the taxable
income of the trust the amount of the income for the taxable year
which is required to be distributed currently. This section shall
not apply in any taxable year in which the trust distributes
amounts other than amounts of income described in paragraph (1).
(b) Limitation on deduction
If the amount of income required to be distributed currently
exceeds the distributable net income of the trust for the taxable
year, the deduction shall be limited to the amount of the
distributable net income. For this purpose, the computation of
distributable net income shall not include items of income which
are not included in the gross income of the trust and the
deductions allocable thereto.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 219.)
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 67, 642, 643, 646, 652,
663 of this title.
-End-
-CITE-
26 USC Sec. 652 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart B - Trusts Which Distribute Current Income Only
-HEAD-
Sec. 652. Inclusion of amounts in gross income of beneficiaries of
trusts distributing current income only
-STATUTE-
(a) Inclusion
Subject to subsection (b), the amount of income for the taxable
year required to be distributed currently by a trust described in
section 651 shall be included in the gross income of the
beneficiaries to whom the income is required to be distributed,
whether distributed or not. If such amount exceeds the
distributable net income, there shall be included in the gross
income of each beneficiary an amount which bears the same ratio to
distributable net income as the amount of income required to be
distributed to such beneficiary bears to the amount of income
required to be distributed to all beneficiaries.
(b) Character of amounts
The amounts specified in subsection (a) shall have the same
character in the hands of the beneficiary as in the hands of the
trust. For this purpose, the amounts shall be treated as consisting
of the same proportion of each class of items entering into the
computation of distributable net income of the trust as the total
of each class bears to the total distributable net income of the
trust, unless the terms of the trust specifically allocate
different classes of income to different beneficiaries. In the
application of the preceding sentence, the items of deduction
entering into the computation of distributable net income shall be
allocated among the items of distributable net income in accordance
with regulations prescribed by the Secretary.
(c) Different taxable years
If the taxable year of a beneficiary is different from that of
the trust, the amount which the beneficiary is required to include
in gross income in accordance with the provisions of this section
shall be based upon the amount of income of the trust for any
taxable year or years of the trust ending within or with his
taxable year.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 219; Pub. L. 94-455, title XIX,
Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
-MISC1-
AMENDMENTS
1976 - Subsec. (b). Pub. L. 94-455 struck out "or his delegate"
after "Secretary".
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 643 of this title.
-End-
-CITE-
26 USC Subpart C - Estates and Trusts Which May
Accumulate Income or Which Distribute Corpus 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart C - Estates and Trusts Which May Accumulate Income or Which
Distribute Corpus
-HEAD-
SUBPART C - ESTATES AND TRUSTS WHICH MAY ACCUMULATE INCOME OR WHICH
DISTRIBUTE CORPUS
-MISC1-
Sec.
661. Deductions for estates and trusts accumulating income
or distributing corpus.(!1)
662. Inclusion of amounts in gross income of beneficiaries
of estates and trusts accumulating income or
distributing corpus.
663. Special rules applicable to sections 661 and 662.
664. Charitable remainder trusts.
AMENDMENTS
1969 - Pub. L. 91-172, title II, Sec. 201(e)(2), Dec. 30, 1969,
83 Stat. 564, added item 664.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in sections 643, 665, 671, 685, 1312
of this title.
-FOOTNOTE-
(!1) So in original. Does not conform to section catchline.
-End-
-CITE-
26 USC Sec. 661 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart C - Estates and Trusts Which May Accumulate Income or Which
Distribute Corpus
-HEAD-
Sec. 661. Deduction for estates and trusts accumulating income or
distributing corpus
-STATUTE-
(a) Deduction
In any taxable year there shall be allowed as a deduction in
computing the taxable income of an estate or trust (other than a
trust to which subpart B applies), the sum of -
(1) any amount of income for such taxable year required to be
distributed currently (including any amount required to be
distributed which may be paid out of income or corpus to the
extent such amount is paid out of income for such taxable year);
and
(2) any other amounts properly paid or credited or required to
be distributed for such taxable year;
but such deduction shall not exceed the distributable net income of
the estate or trust.
(b) Character of amounts distributed
The amount determined under subsection (a) shall be treated as
consisting of the same proportion of each class of items entering
into the computation of distributable net income of the estate or
trust as the total of each class bears to the total distributable
net income of the estate or trust in the absence of the allocation
of different classes of income under the specific terms of the
governing instrument. In the application of the preceding sentence,
the items of deduction entering into the computation of
distributable net income (including the deduction allowed under
section 642(c)) shall be allocated among the items of distributable
net income in accordance with regulations prescribed by the
Secretary.
(c) Limitation on deduction
No deduction shall be allowed under subsection (a) in respect of
any portion of the amount allowed as a deduction under that
subsection (without regard to this subsection) which is treated
under subsection (b) as consisting of any item of distributable net
income which is not included in the gross income of the estate or
trust.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 220; Pub. L. 94-455, title XIX,
Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97-248,
title III, Secs. 302(b)(2), 308(a), Sept. 3, 1982, 96 Stat. 586,
591; Pub. L. 98-67, title I, Sec. 102(a), Aug. 5, 1983, 97 Stat.
369.)
-MISC1-
AMENDMENTS
1983 - Subsec. (a). Pub. L. 98-67 repealed amendments made by
Pub. L. 97-248. See 1982 Amendment note below.
1982 - Subsec. (a). Pub. L. 97-248 provided that, applicable to
payments of interest, dividends, and patronage dividends paid or
credited after June 30, 1983, subsec. (a) is amended by inserting
at end "For purposes of paragraph (1), the amount of distributable
net income shall be computed without the deduction allowed by
section 642(c).". Section 102(a), (b) of Pub. L. 98-67, title I,
Aug. 5, 1983, 97 Stat. 369, repealed subtitle A (Secs. 301-308) of
title III of Pub. L. 97-248 as of the close of June 30, 1983, and
provided that the Internal Revenue Code of 1954 (this title) shall
be applied and administered (subject to certain exceptions) as if
such subtitle A (and the amendments made by such subtitle A) had
not been enacted.
1976 - Subsec. (b). Pub. L. 94-455 struck out "or his delegate"
after "Secretary".
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 67, 642, 643, 646, 662,
663, 665, 666, 677, 678, 6166 of this title.
-End-
-CITE-
26 USC Sec. 662 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart C - Estates and Trusts Which May Accumulate Income or Which
Distribute Corpus
-HEAD-
Sec. 662. Inclusion of amounts in gross income of beneficiaries of
estates and trusts accumulating income or distributing corpus
-STATUTE-
(a) Inclusion
Subject to subsection (b), there shall be included in the gross
income of a beneficiary to whom an amount specified in section
661(a) is paid, credited, or required to be distributed (by an
estate or trust described in section 661), the sum of the following
amounts:
(1) Amounts required to be distributed currently
The amount of income for the taxable year required to be
distributed currently to such beneficiary, whether distributed or
not. If the amount of income required to be distributed currently
to all beneficiaries exceeds the distributable net income
(computed without the deduction allowed by section 642(c),
relating to deduction for charitable, etc., purposes) of the
estate or trust, then, in lieu of the amount provided in the
preceding sentence, there shall be included in the gross income
of the beneficiary an amount which bears the same ratio to
distributable net income (as so computed) as the amount of income
required to be distributed currently to such beneficiary bears to
the amount required to be distributed currently to all
beneficiaries. For purposes of this section, the phrase "the
amount of income for the taxable year required to be distributed
currently" includes any amount required to be paid out of income
or corpus to the extent such amount is paid out of income for
such taxable year.
(2) Other amounts distributed
All other amounts properly paid, credited, or required to be
distributed to such beneficiary for the taxable year. If the sum
of -
(A) the amount of income for the taxable year required to be
distributed currently to all beneficiaries, and
(B) all other amounts properly paid, credited, or required to
be distributed to all beneficiaries
exceeds the distributable net income of the estate or trust,
then, in lieu of the amount provided in the preceding sentence,
there shall be included in the gross income of the beneficiary an
amount which bears the same ratio to distributable net income
(reduced by the amounts specified in (A)) as the other amounts
properly paid, credited or required to be distributed to the
beneficiary bear to the other amounts properly paid, credited, or
required to be distributed to all beneficiaries.
(b) Character of amounts
The amounts determined under subsection (a) shall have the same
character in the hands of the beneficiary as in the hands of the
estate or trust. For this purpose, the amounts shall be treated as
consisting of the same proportion of each class of items entering
into the computation of distributable net income as the total of
each class bears to the total distributable net income of the
estate or trust unless the terms of the governing instrument
specifically allocate different classes of income to different
beneficiaries. In the application of the preceding sentence, the
items of deduction entering into the computation of distributable
net income (including the deduction allowed under section 642(c))
shall be allocated among the items of distributable net income in
accordance with regulations prescribed by the Secretary. In the
application of this subsection to the amount determined under
paragraph (1) of subsection (a), distributable net income shall be
computed without regard to any portion of the deduction under
section 642(c) which is not attributable to income of the taxable
year.
(c) Different taxable years
If the taxable year of a beneficiary is different from that of
the estate or trust, the amount to be included in the gross income
of the beneficiary shall be based on the distributable net income
of the estate or trust and the amounts properly paid, credited, or
required to be distributed to the beneficiary during any taxable
year or years of the estate or trust ending within or with his
taxable year.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 220; Pub. L. 94-455, title XIX,
Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)
-MISC1-
AMENDMENTS
1976 - Subsec. (b). Pub. L. 94-455 struck out "or his delegate"
after "Secretary".
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 643, 663, 667, 677, 678
of this title.
-End-
-CITE-
26 USC Sec. 663 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart C - Estates and Trusts Which May Accumulate Income or Which
Distribute Corpus
-HEAD-
Sec. 663. Special rules applicable to sections 661 and 662
-STATUTE-
(a) Exclusions
There shall not be included as amounts falling within section
661(a) or 662(a) -
(1) Gifts, bequests, etc.
Any amount which, under the terms of the governing instrument,
is properly paid or credited as a gift or bequest of a specific
sum of money or of specific property and which is paid or
credited all at once or in not more than 3 installments. For this
purpose an amount which can be paid or credited only from the
income of the estate or trust shall not be considered as a gift
or bequest of a specific sum of money.
(2) Charitable, etc., distributions
Any amount paid or permanently set aside or otherwise
qualifying for the deduction provided in section 642(c) (computed
without regard to sections 508(d), 681, and 4948(c)(4)).
(3) Denial of double deduction
Any amount paid, credited, or distributed in the taxable year,
if section 651 or section 661 applied to such amount for a
preceding taxable year of an estate or trust because credited or
required to be distributed in such preceding taxable year.
(b) Distributions in first sixty-five days of taxable year
(1) General rule
If within the first 65 days of any taxable year of an estate or
a trust, an amount is properly paid or credited, such amount
shall be considered paid or credited on the last day of the
preceding taxable year.
(2) Limitation
Paragraph (1) shall apply with respect to any taxable year of
an estate or a trust only if the executor of such estate or the
fiduciary of such trust (as the case may be) elects, in such
manner and at such time as the Secretary prescribes by
regulations, to have paragraph (1) apply for such taxable year.
(c) Separate shares treated as separate estates or trusts
For the sole purpose of determining the amount of distributable
net income in the application of sections 661 and 662, in the case
of a single trust having more than one beneficiary, substantially
separate and independent shares of different beneficiaries in the
trust shall be treated as separate trusts. Rules similar to the
rules of the preceding provisions of this subsection shall apply to
treat substantially separate and independent shares of different
beneficiaries in an estate having more than 1 beneficiary as
separate estates. The existence of such substantially separate and
independent shares and the manner of treatment as separate trusts
or estates, including the application of subpart D, shall be
determined in accordance with regulations prescribed by the
Secretary.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 222; Pub. L. 91-172, title I,
Sec. 101(j)(17), title III, Sec. 331(b), Dec. 30, 1969, 83 Stat.
528, 598; Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4,
1976, 90 Stat. 1834; Pub. L. 105-34, title XIII, Secs. 1306(a),
(b), 1307(a), (b), Aug. 5, 1997, 111 Stat. 1041.)
-MISC1-
AMENDMENTS
1997 - Subsec. (b). Pub. L. 105-34, Sec. 1306(a), inserted "an
estate or" before "a trust" in pars. (1) and (2).
Subsec. (b)(2). Pub. L. 105-34, Sec. 1306(b), substituted "the
executor of such estate or the fiduciary of such trust (as the case
may be)" for "the fiduciary of such trust".
Subsec. (c). Pub. L. 105-34, Sec. 1307(a), (b), inserted "estates
or" before "trusts" in heading, "Rules similar to the rules of the
preceding provisions of this subsection shall apply to treat
substantially separate and independent shares of different
beneficiaries in an estate having more than 1 beneficiary as
separate estates." before last sentence, and "or estates" after
"trusts" in last sentence.
1976 - Subsecs. (b)(2), (c). Pub. L. 94-455 struck out "or his
delegate" after "Secretary".
1969 - Subsec. (a)(2). Pub. L. 91-172, Sec. 101(j)(17),
substituted "sections 508(d), 681, and 4948(c)(4)" for "section
681".
Subsec. (b)(2). Pub. L. 91-172, Sec. 331(b), incorporated
existing provisions of subpar. (C) of former first sentence making
subsec. (b) applicable only to a trust where the fiduciary elected
to have the subsec. apply and part of former second sentence making
the election applicable in accordance with prescribed regulations;
substituted provisions for regulations to spell out manner and time
of election for part of former second sentence requiring the
election to be made not later than the time prescribed by law for
filing the return for the year, including any extension; and
omitted: subpars. (A) and (B) of former first sentence which had
provided for application of subsec. (b) only to a trust "(A) which
was in existence prior to January 1, 1954" and "(B) which, under
the terms of its governing instrument, may not distribute in any
taxable year amounts in excess of the income of the preceding
taxable year"; part of former second sentence which required the
election to be made for first taxable year to which this part is
applicable; and third sentence that "If such election is made with
respect to a taxable year, this subsection shall apply to all
amounts properly paid or credited within the first 65 days of all
subsequent taxable years of such trust."
EFFECTIVE DATE OF 1997 AMENDMENT
Section 1306(c) of Pub. L. 105-34 provided that: "The amendments
made by this section [amending this section] shall apply to taxable
years beginning after the date of the enactment of this Act [Aug.
5, 1997]."
Section 1307(c) of Pub. L. 105-34 provided that: "The amendments
made by this section [amending this section] shall apply to estates
of decedents dying after the date of the enactment of this Act
[Aug. 5, 1997]."
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by section 101(j)(17) of Pub. L. 91-172 effective Jan.
1, 1970, see section 101(k)(1) of Pub. L. 91-172, set out as an
Effective Date note under section 4940 of this title.
Amendment by section 331(b) of Pub. L. 91-172 applicable to
taxable years beginning before Jan. 1, 1970, see section 331(d) of
Pub. L. 91-172, set out as a note under section 665 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 643, 1361 of this title.
-End-
-CITE-
26 USC Sec. 664 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart C - Estates and Trusts Which May Accumulate Income or Which
Distribute Corpus
-HEAD-
Sec. 664. Charitable remainder trusts
-STATUTE-
(a) General rule
Notwithstanding any other provision of this subchapter, the
provisions of this section shall, in accordance with regulations
prescribed by the Secretary, apply in the case of a charitable
remainder annuity trust and a charitable remainder unitrust.
(b) Character of distributions
Amounts distributed by a charitable remainder annuity trust or by
a charitable remainder unitrust shall be considered as having the
following characteristics in the hands of a beneficiary to whom is
paid the annuity described in subsection (d)(1)(A) or the payment
described in subsection (d)(2)(A):
(1) First, as amounts of income (other than gains, and amounts
treated as gains, from the sale or other disposition of capital
assets) includible in gross income to the extent of such income
of the trust for the year and such undistributed income of the
trust for prior years;
(2) Second, as a capital gain to the extent of the capital gain
of the trust for the year and the undistributed capital gain of
the trust for prior years;
(3) Third, as other income to the extent of such income of the
trust for the year and such undistributed income of the trust for
prior years; and
(4) Fourth, as a distribution of trust corpus.
For purposes of this section, the trust shall determine the amount
of its undistributed capital gain on a cumulative net basis.
(c) Exemption from income taxes
A charitable remainder annuity trust and a charitable remainder
unitrust shall, for any taxable year, not be subject to any tax
imposed by this subtitle, unless such trust, for such year, has
unrelated business taxable income (within the meaning of section
512, determined as if part III of subchapter F applied to such
trust).
(d) Definitions
(1) Charitable remainder annuity trust
For purposes of this section, a charitable remainder annuity
trust is a trust -
(A) from which a sum certain (which is not less than 5
percent nor more than 50 percent of the initial net fair market
value of all property placed in trust) is to be paid, not less
often than annually, to one or more persons (at least one of
which is not an organization described in section 170(c) and,
in the case of individuals, only to an individual who is living
at the time of the creation of the trust) for a term of years
(not in excess of 20 years) or for the life or lives of such
individual or individuals,
(B) from which no amount other than the payments described in
subparagraph (A) and other than qualified gratuitous transfers
described in subparagraph (C) may be paid to or for the use of
any person other than an organization described in section
170(c),
(C) following the termination of the payments described in
subparagraph (A), the remainder interest in the trust is to be
transferred to, or for the use of, an organization described in
section 170(c) or is to be retained by the trust for such a use
or, to the extent the remainder interest is in qualified
employer securities (as defined in subsection (g)(4)), all or
part of such securities are to be transferred to an employee
stock ownership plan (as defined in section 4975(e)(7)) in a
qualified gratuitous transfer (as defined by subsection (g)),
and
(D) the value (determined under section 7520) of such
remainder interest is at least 10 percent of the initial net
fair market value of all property placed in the trust.
(2) Charitable remainder unitrust
For purposes of this section, a charitable remainder unitrust
is a trust -
(A) from which a fixed percentage (which is not less than 5
percent nor more than 50 percent) of the net fair market value
of its assets, valued annually, is to be paid, not less often
than annually, to one or more persons (at least one of which is
not an organization described in section 170(c) and, in the
case of individuals, only to an individual who is living at the
time of the creation of the trust) for a term of years (not in
excess of 20 years) or for the life or lives of such individual
or individuals,
(B) from which no amount other than the payments described in
subparagraph (A) and other than qualified gratuitous transfers
described in subparagraph (C) may be paid to or for the use of
any person other than an organization described in section
170(c),
(C) following the termination of the payments described in
subparagraph (A), the remainder interest in the trust is to be
transferred to, or for the use of, an organization described in
section 170(c) or is to be retained by the trust for such a use
or, to the extent the remainder interest is in qualified
employer securities (as defined in subsection (g)(4)), all or
part of such securities are to be transferred to an employee
stock ownership plan (as defined in section 4975(e)(7)) in a
qualified gratuitous transfer (as defined by subsection (g)),
and
(D) with respect to each contribution of property to the
trust, the value (determined under section 7520) of such
remainder interest in such property is at least 10 percent of
the net fair market value of such property as of the date such
property is contributed to the trust.
(3) Exception
Notwithstanding the provisions of paragraphs (2)(A) and (B),
the trust instrument may provide that the trustee shall pay the
income beneficiary for any year -
(A) the amount of the trust income, if such amount is less
than the amount required to be distributed under paragraph
(2)(A), and
(B) any amount of the trust income which is in excess of the
amount required to be distributed under paragraph (2)(A), to
the extent that (by reason of subparagraph (A)) the aggregate
of the amounts paid in prior years was less than the aggregate
of such required amounts.
(4) Severance of certain additional contributions
If -
(A) any contribution is made to a trust which before the
contribution is a charitable remainder unitrust, and
(B) such contribution would (but for this paragraph) result
in such trust ceasing to be a charitable unitrust by reason of
paragraph (2)(D),
such contribution shall be treated as a transfer to a separate
trust under regulations prescribed by the Secretary.
(e) Valuation for purposes of charitable contribution
For purposes of determining the amount of any charitable
contribution, the remainder interest of a charitable remainder
annuity trust or charitable remainder unitrust shall be computed on
the basis that an amount equal to 5 percent of the net fair market
value of its assets (or a greater amount, if required under the
terms of the trust instrument) is to be distributed each year.
(f) Certain contingencies permitted
(1) General rule
If a trust would, but for a qualified contingency, meet the
requirements of paragraph (1)(A) or (2)(A) of subsection (d),
such trust shall be treated as meeting such requirements.
(2) Value determined without regard to qualified contingency
For purposes of determining the amount of any charitable
contribution (or the actuarial value of any interest), a
qualified contingency shall not be taken into account.
(3) Qualified contingency
For purposes of this subsection, the term "qualified
contingency" means any provision of a trust which provides that,
upon the happening of a contingency, the payments described in
paragraph (1)(A) or (2)(A) of subsection (d) (as the case may be)
will terminate not later than such payments would otherwise
terminate under the trust.
(g) Qualified gratuitous transfer of qualified employer securities
(1) In general
For purposes of this section, the term "qualified gratuitous
transfer" means a transfer of qualified employer securities to an
employee stock ownership plan (as defined in section 4975(e)(7))
but only to the extent that -
(A) the securities transferred previously passed from a
decedent dying before January 1, 1999, to a trust described in
paragraph (1) or (2) of subsection (d),
(B) no deduction under section 404 is allowable with respect
to such transfer,
(C) such plan contains the provisions required by paragraph
(3),
(D) such plan treats such securities as being attributable to
employer contributions but without regard to the limitations
otherwise applicable to such contributions under section 404,
and
(E) the employer whose employees are covered by the plan
described in this paragraph files with the Secretary a verified
written statement consenting to the application of sections
4978 and 4979A with respect to such employer.
(2) Exception
The term "qualified gratuitous transfer" shall not include a
transfer of qualified employer securities to an employee stock
ownership plan unless -
(A) such plan was in existence on August 1, 1996,
(B) at the time of the transfer, the decedent and members of
the decedent's family (within the meaning of section
2032A(e)(2)) own (directly or through the application of
section 318(a)) no more than 10 percent of the value of the
stock of the corporation referred to in paragraph (4), and
(C) immediately after the transfer, such plan owns (after the
application of section 318(a)(4)) at least 60 percent of the
value of the outstanding stock of the corporation.
(3) Plan requirements
A plan contains the provisions required by this paragraph if
such plan provides that -
(A) the qualified employer securities so transferred are
allocated to plan participants in a manner consistent with
section 401(a)(4),
(B) plan participants are entitled to direct the plan as to
the manner in which such securities which are entitled to vote
and are allocated to the account of such participant are to be
voted,
(C) an independent trustee votes the securities so
transferred which are not allocated to plan participants,
(D) each participant who is entitled to a distribution from
the plan has the rights described in subparagraphs (A) and (B)
of section 409(h)(1),
(E) such securities are held in a suspense account under the
plan to be allocated each year, up to the applicable limitation
under paragraph (7), after first allocating all other annual
additions for the limitation year, up to the limitations under
sections 415(c) and (e),(!1) and
(F) on termination of the plan, all securities so transferred
which are not allocated to plan participants as of such
termination are to be transferred to, or for the use of, an
organization described in section 170(c).
For purposes of the preceding sentence, the term "independent
trustee" means any trustee who is not a member of the family
(within the meaning of section 2032A(e)(2)) of the decedent or a
5-percent shareholder. A plan shall not fail to be treated as
meeting the requirements of section 401(a) by reason of meeting
the requirements of this subsection.
(4) Qualified employer securities
For purposes of this section, the term "qualified employer
securities" means employer securities (as defined in section
409(l)) which are issued by a domestic corporation -
(A) which has no outstanding stock which is readily tradable
on an established securities market, and
(B) which has only 1 class of stock.
(5) Treatment of securities allocated by employee stock ownership
plan to persons related to decedent or 5-percent shareholders
(A) In general
If any portion of the assets of the plan attributable to
securities acquired by the plan in a qualified gratuitous
transfer are allocated to the account of -
(i) any person who is related to the decedent (within the
meaning of section 267(b)) or a member of the decedent's
family (within the meaning of section 2032A(e)(2)), or
(ii) any person who, at the time of such allocation or at
any time during the 1-year period ending on the date of the
acquisition of qualified employer securities by the plan, is
a 5-percent shareholder of the employer maintaining the plan,
the plan shall be treated as having distributed (at the time of
such allocation) to such person or shareholder the amount so
allocated.
(B) 5-percent shareholder
For purposes of subparagraph (A), the term "5-percent
shareholder" means any person who owns (directly or through the
application of section 318(a)) more than 5 percent of the
outstanding stock of the corporation which issued such
qualified employer securities or of any corporation which is a
member of the same controlled group of corporations (within the
meaning of section 409(l)(4)) as such corporation. For purposes
of the preceding sentence, section 318(a) shall be applied
without regard to the exception in paragraph (2)(B)(i) thereof.
(C) Cross reference
For excise tax on allocations described in subparagraph (A),
see section 4979A.
(6) Tax on failure to transfer unallocated securities to charity
on termination of plan
If the requirements of paragraph (3)(F) are not met with
respect to any securities, there is hereby imposed a tax on the
employer maintaining the plan in an amount equal to the sum of -
(A) the amount of the increase in the tax which would be
imposed by chapter 11 if such securities were not transferred
as described in paragraph (1), and
(B) interest on such amount at the underpayment rate under
section 6621 (and compounded daily) from the due date for
filing the return of the tax imposed by chapter 11.
(7) Applicable limitation
(A) In general
For purposes of paragraph (3)(E), the applicable limitation
under this paragraph with respect to a participant is an amount
equal to the lesser of -
(i) $30,000, or
(ii) 25 percent of the participant's compensation (as
defined in section 415(c)(3)).
(B) Cost-of-living adjustment
The Secretary shall adjust annually the $30,000 amount under
subparagraph (A)(i) at the same time and in the same manner as
under section 415(d), except that the base period shall be the
calendar quarter beginning October 1, 1993, and any increase
under this subparagraph which is not a multiple of $5,000 shall
be rounded to the next lowest multiple of $5,000.
-SOURCE-
(Added Pub. L. 91-172, title II, Sec. 201(e)(1), Dec. 30, 1969, 83
Stat. 562; amended Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A),
Oct. 4, 1976, 90 Stat. 1834; Pub. L. 98-369, div. A, title X, Sec.
1022(d), July 18, 1984, 98 Stat. 1029; Pub. L. 105-34, title X,
Sec. 1089(a)(1), (b)(1), (2), (4), title XV, Sec. 1530(a), (b),
(c)(5), 111 Stat. 960, 1075, 1078; Pub. L. 105-206, title VI, Sec.
6010(r), July 22, 1998, 112 Stat. 817; Pub. L. 106-554, Sec.
1(a)(7) [title III, Sec. 319(7)], Dec. 21, 2000, 114 Stat. 2763,
2763A-646; Pub. L. 107-16, title VI, Sec. 632(a)(3)(H), June 7,
2001, 115 Stat. 114.)
-STATAMEND-
AMENDMENT OF SECTION
For termination of amendment by section 901 of Pub. L. 107-16,
see Effective and Termination Dates of 2001 Amendment note below.
-REFTEXT-
REFERENCES IN TEXT
Section 415(e) of this title, referred to in subsec. (g)(3)(E),
was repealed by Pub. L. 104-188, title I, Sec. 1452(a), Aug. 20,
1996, 110 Stat. 1816.
-MISC1-
AMENDMENTS
2001 - Subsec. (g)(3)(E). Pub. L. 107-16, Secs. 632(a)(3)(H)(i),
901, temporarily substituted "applicable limitation under paragraph
(7)" for "limitations under section 415(c)". See Effective and
Termination Dates of 2001 Amendment note below.
Subsec. (g)(7). Pub. L. 107-16, Secs. 632(a)(3)(H)(ii), 901,
temporarily added par. (7). See Effective and Termination Dates of
2001 Amendment note below.
2000 - Subsec. (d)(1)(C), (2)(C). Pub. L. 106-554 struck out
period after "(as defined by subsection (g))". See 1997 Amendment
notes below.
1998 - Subsec. (d)(1)(C), (2)(C). Pub. L. 105-206 inserted ",
and" at end.
1997 - Subsec. (d)(1)(A). Pub. L. 105-34, Sec. 1089(a)(1),
inserted "nor more than 50 percent" after "not less than 5
percent".
Subsec. (d)(1)(B). Pub. L. 105-34, Sec. 1530(c)(5), inserted "and
other than qualified gratuitous transfers described in subparagraph
(C)" after "subparagraph (A)".
Pub. L. 105-34, Sec. 1089(b)(1), struck out "and" at end.
Subsec. (d)(1)(C). Pub. L. 105-34, Sec. 1530(a), which directed
amendment of subpar. (C) by striking period at end and inserting
"or, to the extent the remainder interest is in qualified employer
securities (as defined in subsection (g)(4)), all or part of such
securities are to be transferred to an employee stock ownership
plan (as defined in section 4975(e)(7)) in a qualified gratuitous
transfer (as defined by subsection (g)).", was executed by making
the insertion after "for such a use" to reflect the probable intent
of Congress. Subpar. (C) did not contain a period after amendment
by Pub. L. 105-34, Sec. 1089(b)(1). See below.
Pub. L. 105-34, Sec. 1089(b)(1), struck out period after "for
such a use".
Subsec. (d)(1)(D). Pub. L. 105-34, Sec. 1089(b)(1), added subpar.
(D).
Subsec. (d)(2)(A). Pub. L. 105-34, Sec. 1089(a)(1), inserted "nor
more than 50 percent" after "not less than 5 percent".
Subsec. (d)(2)(B). Pub. L. 105-34, Sec. 1530(c)(5), inserted "and
other than qualified gratuitous transfers described in subparagraph
(C)" after "subparagraph (A)".
Pub. L. 105-34, Sec. 1089(b)(2), struck out "and" at end.
Subsec. (d)(2)(C). Pub. L. 105-34, Sec. 1530(a), which directed
amendment of subpar. (C) by striking period at end and inserting
"or, to the extent the remainder interest is in qualified employer
securities (as defined in subsection (g)(4)), all or part of such
securities are to be transferred to an employee stock ownership
plan (as defined in section 4975(e)(7)) in a qualified gratuitous
transfer (as defined by subsection (g)).", was executed by making
the insertion after "for such a use" to reflect the probable intent
of Congress. Subpar. (C) did not contain a period after amendment
by Pub. L. 105-34, Sec. 1089(b)(2). See below.
Pub. L. 105-34, Sec. 1089(b)(2), struck out period after "for
such a use".
Subsec. (d)(2)(D). Pub. L. 105-34, Sec. 1089(b)(2), added subpar.
(D).
Subsec. (d)(4). Pub. L. 105-34, Sec. 1089(b)(4), added par. (4).
Subsec. (g). Pub. L. 105-34, Sec. 1530(b), added subsec. (g).
1984 - Subsec. (f). Pub. L. 98-369 added subsec. (f).
1976 - Subsec. (a). Pub. L. 94-455 struck out "or his delegate"
after "Secretary".
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to years beginning after
Dec. 31, 2001, see section 632(a)(4) of Pub. L. 107-16, set out as
a note under section 72 of this title.
Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or
limitation years beginning after Dec. 31, 2010, and the Internal
Revenue Code of 1986 to be applied and administered to such years
as if such amendment had never been enacted, see section 901 of
Pub. L. 107-16, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 1089(a)(2) of Pub. L. 105-34 provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
to transfers in trust after June 18, 1997."
Section 1089(b)(6) of Pub. L. 105-34 provided that:
"(A) In general. - Except as otherwise provided in this
paragraph, the amendments made by this subsection [amending this
section and section 2055 of this title] shall apply to transfers in
trust after July 28, 1997.
"(B) Special rule for certain decedents. - The amendments made by
this subsection shall not apply to transfers in trust under the
terms of a will (or other testamentary instrument) executed on or
before July 28, 1997, if the decedent -
"(i) dies before January 1, 1999, without having republished
the will (or amended such instrument) by codicil or otherwise, or
"(ii) was on July 28, 1997, under a mental disability to change
the disposition of his property and did not regain his competence
to dispose of such property before the date of his death."
Amendment by section 1530(a), (b), (c)(5) of Pub. L. 105-34
applicable to transfers made by trusts to, or for the use of, an
employee stock ownership plan after Aug. 5, 1997, see section
1530(d) of Pub. L. 105-34, set out as a note under section 401 of
this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369, applicable to transfers after Dec.
31, 1978, see section 1022(e)(2) of Pub. L. 98-369, set out as a
note under section 2055 of this title.
EFFECTIVE DATE
Section applicable to transfers in trust made after July 31,
1969, see section 201(g)(5), set out as an Effective Date of 1969
Amendment note under section 170 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 170, 401, 404, 415, 674,
1361, 2055, 2056, 2207B, 2522, 2632, 2652, 4947, 4975, 4978, 4979A,
6049 of this title; title 15 sections 37a, 80a-3.
-FOOTNOTE-
(!1) See References in Text note below.
-End-
-CITE-
26 USC Subpart D - Treatment of Excess Distributions by
Trusts 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart D - Treatment of Excess Distributions by Trusts
-HEAD-
SUBPART D - TREATMENT OF EXCESS DISTRIBUTIONS BY TRUSTS
-MISC1-
Sec.
665. Definitions applicable to subpart D.
666. Accumulation distribution allocated to preceding
years.
667. Treatment of amounts deemed distributed by trust in
preceding years.
668. Interest charge on accumulation distributions from
foreign trusts.
[669. Repealed.]
AMENDMENTS
1976 - Pub. L. 94-455, title VII, Sec. 701(g)(1), title X, Sec.
1014(c), Oct. 4, 1976, 90 Stat. 1580, 1617, substituted in item 667
"Treatment of amounts deemed distributed by trust in preceding
years" for "Denial of refund to trusts; authorization of credit to
beneficiaries", in item 668 "Interest charge on accumulation
distributions from foreign trusts" for "Treatment of amounts deemed
distributed in preceding years", and struck out item 669 "Treatment
of capital gain deemed distributed in preceding years".
1969 - Pub. L. 91-172, title III, Sec. 331(a), Dec. 30, 1969, 83
Stat. 592, struck out "5" after "allocated to" in item 666,
inserted "authorization of credit to beneficiaries" in item 667,
and substituted "Treatment of capital gain deemed distributed in
preceding years" for "Special rules applicable to certain foreign
trusts" in item 669.
1962 - Pub. L. 87-834, Sec. 7(i)(1), Oct. 16, 1962, 76 Stat. 988,
added item 669.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in sections 643, 671, 685, 1312 of
this title.
-End-
-CITE-
26 USC Sec. 665 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart D - Treatment of Excess Distributions by Trusts
-HEAD-
Sec. 665. Definitions applicable to subpart D
-STATUTE-
(a) Undistributed net income
For purposes of this subpart, the term "undistributed net income"
for any taxable year means the amount by which distributable net
income of the trust for such taxable year exceeds the sum of -
(1) the amounts for such taxable year specified in paragraphs
(1) and (2) of section 661(a), and
(2) the amount of taxes imposed on the trust attributable to
such distributable net income.
(b) Accumulation distribution
For purposes of this subpart, except as provided in subsection
(c), the term "accumulation distribution" means, for any taxable
year of the trust, the amount by which -
(1) the amounts specified in paragraph (2) of section 661(a)
for such taxable year, exceed
(2) distributable net income for such year reduced (but not
below zero) by the amounts specified in paragraph (1) of section
661(a).
For purposes of section 667 (other than subsection (c) thereof,
relating to multiple trusts), the amounts specified in paragraph
(2) of section 661(a) shall not include amounts properly paid,
credited, or required to be distributed to a beneficiary from a
trust (other than a foreign trust) as income accumulated before the
birth of such beneficiary or before such beneficiary attains the
age of 21. If the amounts properly paid, credited, or required to
be distributed by the trust for the taxable year do not exceed the
income of the trust for such year, there shall be no accumulation
distribution for such year.
(c) Exception for accumulation distributions from certain domestic
trusts
For purposes of this subpart -
(1) In general
In the case of a qualified trust, any distribution in any
taxable year beginning after the date of the enactment of this
subsection shall be computed without regard to any undistributed
net income.
(2) Qualified trust
For purposes of this subsection, the term "qualified trust"
means any trust other than -
(A) a foreign trust (or, except as provided in regulations, a
domestic trust which at any time was a foreign trust), or
(B) a trust created before March 1, 1984, unless it is
established that the trust would not be aggregated with other
trusts under section 643(f) if such section applied to such
trust.
(d) Taxes imposed on the trust
For purposes of this subpart -
(1) In general
The term "taxes imposed on the trust" means the amount of the
taxes which are imposed for any taxable year of the trust under
this chapter (without regard to this subpart or part IV of
subchapter A) and which, under regulations prescribed by the
Secretary, are properly allocable to the undistributed portions
of distributable net income and gains in excess of losses from
sales or exchanges of capital assets. The amount determined in
the preceding sentence shall be reduced by any amount of such
taxes deemed distributed under section 666(b) and (c) to any
beneficiary.
(2) Foreign trusts
In the case of any foreign trust, the term "taxes imposed on
the trust" includes the amount, reduced as provided in the last
sentence of paragraph (1), of any income, war profits, and excess
profits taxes imposed by any foreign country or possession of the
United States on such foreign trust which, as determined under
paragraph (1), are so properly allocable. Under rules or
regulations prescribed by the Secretary, in the case of any
foreign trust of which the settlor or another person would be
treated as owner of any portion of the trust under subpart E but
for section 672(f), the term "taxes imposed on the trust"
includes the allocable amount of any income, war profits, and
excess profits taxes imposed by any foreign country or possession
of the United States on the settlor or such other person in
respect of trust income.
(e) Preceding taxable year
For purposes of this subpart -
(1) In the case of a foreign trust created by a United States
person, the term "preceding taxable year" does not include any
taxable year of the trust to which this part does not apply.
(2) In the case of a preceding taxable year with respect to
which a trust qualified, without regard to this subpart, under
the provisions of subpart B, for purposes of the application of
this subpart to such trust for such taxable year, such trust
shall, in accordance with regulations prescribed by the
Secretary, be treated as a trust to which subpart C applies.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 223; Pub. L. 87-834, Sec. 7(b),
Oct. 16, 1962, 76 Stat. 985; Pub. L. 91-172, title III, Sec.
331(a), Dec. 30, 1969, 83 Stat. 592; Pub. L. 92-178, title III,
Sec. 306(a), Dec. 10, 1971, 85 Stat. 524; Pub. L. 94-455, title
VII, Secs. 701(b), (c), (d)(2), (3), title XIX, Sec.
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1577, 1578, 1834; Pub. L.
95-600, title VII, Sec. 701(q)(1)(A), Nov. 6, 1978, 92 Stat. 2909;
Pub. L. 99-514, title XVIII, Sec. 1847(b)(16), Oct. 22, 1986, 100
Stat. 2857; Pub. L. 101-508, title XI, Sec. 11802(f)(2), Nov. 5,
1990, 104 Stat. 1388-530; Pub. L. 104-188, title I, Sec.
1904(b)(1), (c)(2), Aug. 20, 1996, 110 Stat. 1912; Pub. L. 105-34,
title V, Sec. 507(a), title XVI, Sec. 1604(g)(2), Aug. 5, 1997, 111
Stat. 856, 1099.)
-REFTEXT-
REFERENCES IN TEXT
The date of the enactment of this subsection, referred to in
subsec. (c)(1), is the date of enactment of Pub. L. 105-34, which
was approved Aug. 5, 1997.
-MISC1-
AMENDMENTS
1997 - Subsec. (b). Pub. L. 105-34, Sec. 507(a)(2), inserted
"except as provided in subsection (c)," after "subpart," in
introductory provisions.
Subsec. (c). Pub. L. 105-34, Sec. 507(a)(1), added subsec. (c).
Subsec. (d)(1). Pub. L. 105-34, Sec. 1604(g)(2), struck out "or
669(d) and (e)" after "666(b) and (c)".
1996 - Subsec. (c). Pub. L. 104-188, Sec. 1904(c)(2), struck out
subsec. (c) which read as follows: "Special Rule Applicable to
Distributions by Certain Foreign Trusts. - For purposes of this
subpart, any amount paid to a United States person which is from a
payor who is not a United States person and which is derived
directly or indirectly from a foreign trust created by a United
States person shall be deemed in the year of payment to have been
directly paid by the foreign trust."
Subsec. (d)(2). Pub. L. 104-188, Sec. 1904(b)(1), inserted at end
"Under rules or regulations prescribed by the Secretary, in the
case of any foreign trust of which the settlor or another person
would be treated as owner of any portion of the trust under subpart
E but for section 672(f), the term 'taxes imposed on the trust'
includes the allocable amount of any income, war profits, and
excess profits taxes imposed by any foreign country or possession
of the United States on the settlor or such other person in respect
of trust income."
1990 - Subsec. (e). Pub. L. 101-508 amended subsec. (e)
generally. Prior to amendment, subsec. (e) read as follows: "For
purposes of this subpart -
"(1) in the case of a trust (other than a foreign trust created
by a United States person), the term 'preceding taxable year'
does not include any taxable year of the trust -
"(A) which precedes by more than 5 years the taxable year of
the trust in which an accumulation distribution is made, if it
is made in a taxable year beginning before January 1, 1974, or
"(B) which begins before January 1, 1969, in the case of an
accumulation distribution made during a taxable year beginning
after December 31, 1973, and
"(2) in the case of a foreign trust created by a United States
person, such term does not include any taxable year of the trust
to which this part does not apply.
In the case of a preceding taxable year with respect to which a
trust qualifies (without regard to this subpart) under the
provisions of subpart B, for purposes of the application of this
subpart to such trust for such taxable year, such trust shall, in
accordance with regulations prescribed by the Secretary, be treated
as a trust to which subpart C applies."
1986 - Subsec. (d)(1). Pub. L. 99-514 substituted "part IV" for
"subpart A of part IV".
1978 - Subsec. (d). Pub. L. 95-600 designated existing provisions
as par. (1), defined "taxes imposed on the trust" to mean
imposition of taxes without regard to subpart A of part IV of
subchapter (A), and added par. (2).
1976 - Subsec. (b). Pub. L. 94-455, Sec. 701(b), (c), inserted
provisions that for purposes of sec. 667 the amounts specified in
par. (2) of sec. 661(a) not include amounts paid, credited, or
required to be distributed to a beneficiary from a trust as income
accumulated before the birth of such beneficiary or before such
beneficiary reaches 21, and that if the amounts paid, credited, or
required to be distributed by the trust for the taxable year do not
exceed the income of the trust for such year, there be no
accumulation distribution for such year.
Subsecs. (d), (e). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
out "or his delegate" after "Secretary".
Subsec. (e)(1). Pub. L. 94-455, Sec. 701(d)(2), struck out
provision that preceding taxable year does not include any taxable
year of the trust which begins before Jan. 1, 1969, in the case of
a capital gain distribution made during a taxable year beginning
after Dec. 31, 1968.
Subsecs. (f), (g). Pub. L. 94-455, Sec. 701(d)(3), struck out
subsec. (f) which related to undistributed capital gains, and
subsec. (g) which related to capital gain distribution.
1971 - Subsec. (g). Pub. L. 92-178 struck out "for such taxable
year" after "undistributed capital gain" in introductory text.
1969 - Subsec. (a)(2). Pub. L. 91-172 inserted "attributable to
such distributable net income" after "on the trust".
Subsec. (b). Pub. L. 91-172 substituted "Accumulation
distribution" for "Accumulation distributions of trusts other than
certain foreign trusts" in heading, combined existing provisions of
subsecs. (b) and (c) defining "accumulation distribution" in the
case of a trust (other than a foreign trust created by a United
States person) and of a foreign trust created by a United States
person, respectively, in provisions now designated as pars. (1) and
(2), deleting "the amount (if in excess of $2,000)" before "by
which" in introductory text and inserting "(but not below zero)" in
par. (2), and deleted second sentence providing that for purposes
of this subsection, the amount specified in par. (2) of section
661(a) shall be determined without regard to section 666 and
excepting from "accumulation distributions": accumulations before
birth or attainment of age 21; distributions for emergency needs;
distributions, where beneficiary attained specified age or ages and
there were not more than 4 distributions, at intervals of 4 or more
years; and final distribution of trust was made more than 9 years
after date of last transfer to the trust.
Subsec. (c). Pub. L. 91-172 substituted "Special rule applicable
to distributions by certain foreign trusts" for "Accumulation
distribution of certain foreign trusts" in heading, inserted
introductory phrase "For purposes of this subpart", reenacted
provisions of former third sentence as the subsection, struck out
first sentence which defined in the case of a foreign trust created
by a United States person the term "accumulation distribution",
(see subsec. (b) of this section), and deleted second sentence
which stated that "For purposes of this subsection, the amount
specified in paragraph (2) of section 661(a) shall be determined
without regard to section 666."
Subsec. (d). Pub. L. 91-172 substituted "taxable year of the
trust" for "taxable year on the trust", "allocable to the
undistributed portions of distributable net income and gains to
excess of losses from sales or exchanges of capital assets" for
"allocable to the undistributed portion of the distributable net
income", and "reduced by any amount of such taxes deemed
distributed under section 666(b) and (c) or 669(d) and (e) to any
beneficiary" for "reduced by any amount of such taxes allowed,
under sections 667 and 668, as a credit to any beneficiary on
account of any accumulation distribution determined for any taxable
year".
Subsec. (e). Pub. L. 91-172 substituted provisions of first
sentence contained in pars. 1(A) to (C) and (2) for prior first
sentence which read "For purposes of this subpart, the term
'preceding taxable year' does not include any taxable year of the
trust to which this part does not apply" and reenacted provisions
of second sentence.
Subsecs. (f), (g). Pub. L. 91-172 added subsecs. (f) and (g).
1962 - Subsec. (b). Pub. L. 87-834, Sec. 7(b)(1), substituted
"Accumulation distributions of trusts other than certain foreign
trusts" for "Accumulation distribution" in heading, and inserted
"in the case of a trust (other than a foreign trust created by a
United States person)," after "purposes of this subpart,".
Subsecs. (c) to (e). Pub. L. 87-834, Sec. 7(b)(2), added subsec.
(c) and redesignated former subsecs. (c) and (d) as (d) and (e),
respectively.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 507(c)(1) of Pub. L. 105-34 provided that: "The
amendments made by subsection (a) [amending this section] shall
apply to distributions in taxable years beginning after the date of
the enactment of this Act [Aug. 5, 1997]."
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 effective Aug. 20, 1996, with
exception for certain trusts, see section 1904(d) of Pub. L.
104-188, set out as a note under section 643 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 effective, except as otherwise
provided, as if included in the provisions of the Tax Reform Act of
1984, Pub. L. 98-369, div. A, to which such amendment relates, see
section 1881 of Pub. L. 99-514, set out as a note under section 48
of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Section 701(q)(3)(A) of Pub. L. 95-600 provided that: "The
amendments made by paragraph (1) [amending this section and section
667 of this title] shall apply to distributions made in taxable
years beginning after December 31, 1975."
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 701(b), (c), (d)(2), (3) of Pub. L. 94-455
applicable to distributions made in taxable years beginning after
Dec. 31, 1975, see section 701(h), set out as a note under section
667 of this title.
EFFECTIVE DATE OF 1971 AMENDMENT
Section 306(a) of Pub. L. 92-178 provided that the amendment made
by that section is effective with respect to taxable years
beginning after Dec. 31, 1968.
EFFECTIVE DATE OF 1969 AMENDMENT
Section 331(d) of Pub. L. 91-172, as amended by Pub. L. 92-178,
title III, Sec. 306(b), Dec. 10, 1971, 85 Stat. 524; Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) General rule. - Except as otherwise provided in this
subsection, the amendments made by this section [amending this
section and sections 663, 666 to 669, and 6401 of this title] shall
apply to taxable years beginning after December 31, 1968.
"(2) Exceptions. -
"(A) Amounts paid, credited, or required to be distributed by a
trust (other than a foreign trust created by a United States
person) on or before the last day of a taxable year of the trust
beginning before January 1, 1974, shall not be deemed to be
accumulation distributions to the extent that such amounts were
accumulated by a trust in taxable years of such trust beginning
before January 1, 1969, and would have been excepted from the
definition of an accumulation distribution by reason of paragraph
(1), (2), (3), or (4) of section 665(b) of the Internal Revenue
Code of 1986 [formerly I.R.C. 1954], as in effect on December 31,
1968, if they had been distributed on the last day of the last
taxable year of the trust beginning before January 1, 1969.
"(B) For taxable years of a trust beginning before January 1,
1970, the first sentence of section 666(a) of the Internal
Revenue Code of 1986 (as amended by this section) shall not
apply, and the amount of the accumulation distribution of the
trust for such taxable years shall be deemed to be an amount
within the meaning of paragraph (2) of section 661(a) distributed
on the last day of each of the preceding taxable years to the
extent that such amount exceeds the total of any undistributed
net income for any taxable years intervening between the taxable
year with respect of which the accumulation distribution is
determined and such preceding taxable year.
"(C) In the case of a trust which was in existence on December
31, 1969, section 669 of the Internal Revenue Code of 1986, as
amended by this section, shall not apply to capital gain
distributions made to a beneficiary before January 1, 1973. If
the beneficiary receives capital gain distributions from more
than one such trust before January 1, 1973, the preceding
sentence shall apply to capital gain distributions from only one
such trust, such one to be designated by the taxpayer in
accordance with regulations prescribed by the Secretary or his
delegate. For purposes of the preceding sentence, capital gain
distributions received from a trust qualifying under section
2056(b)(5) of the Internal Revenue Code of 1986 by a surviving
spouse (who is the beneficiary of only one such trust) shall be
disregarded."
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment of section by Pub. L. 87-834 applicable with respect to
distributions made after Dec. 31, 1962, see section 7(j) of Pub. L.
87-834, set out as a note under section 643 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or
title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1989, see section 1140 of Pub. L. 99-514, as amended, set out as a
note under section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 667 of this title.
-End-
-CITE-
26 USC Sec. 666 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart D - Treatment of Excess Distributions by Trusts
-HEAD-
Sec. 666. Accumulation distribution allocated to preceding years
-STATUTE-
(a) Amount allocated
In the case of a trust which is subject to subpart C, the amount
of the accumulation distribution of such trust for a taxable year
shall be deemed to be an amount within the meaning of paragraph (2)
of section 661(a) distributed on the last day of each of the
preceding taxable years, commencing with the earliest of such
years, to the extent that such amount exceeds the total of any
undistributed net income for all earlier preceding taxable years.
The amount deemed to be distributed in any such preceding taxable
year under the preceding sentence shall not exceed the
undistributed net income for such preceding taxable year. For
purposes of this subsection, undistributed net income for each of
such preceding taxable years shall be computed without regard to
such accumulation distribution and without regard to any
accumulation distribution determined for any succeeding taxable
year.
(b) Total taxes deemed distributed
If any portion of an accumulation distribution for any taxable
year is deemed under subsection (a) to be an amount within the
meaning of paragraph (2) of section 661(a) distributed on the last
day of any preceding taxable year, and such portion of such
distribution is not less than the undistributed net income for such
preceding taxable year, the trust shall be deemed to have
distributed on the last day of such preceding taxable year an
additional amount within the meaning of paragraph (2) of section
661(a). Such additional amount shall be equal to the taxes (other
than the tax imposed by section 55) imposed on the trust for such
preceding taxable year attributable to the undistributed net
income. For purposes of this subsection, the undistributed net
income and the taxes imposed on the trust for such preceding
taxable year attributable to such undistributed net income shall be
computed without regard to such accumulation distribution and
without regard to any accumulation distribution determined for any
succeeding taxable year.
(c) Pro rata portion of taxes deemed distributed
If any portion of an accumulation distribution for any taxable
year is deemed under subsection (a) to be an amount within the
meaning of paragraph (2) of section 661(a) distributed on the last
day of any preceding taxable year and such portion of the
accumulation distribution is less than the undistributed net income
for such preceding taxable year, the trust shall be deemed to have
distributed on the last day of such preceding taxable year an
additional amount within the meaning of paragraph (2) of section
661(a). Such additional amount shall be equal to the taxes (other
than the tax imposed by section 55) imposed on the trust for such
taxable year attributable to the undistributed net income
multiplied by the ratio of the portion of the accumulation
distribution to the undistributed net income of the trust for such
year. For purposes of this subsection, the undistributed net income
and the taxes imposed on the trust for such preceding taxable year
attributable to such undistributed net income shall be computed
without regard to the accumulation distribution and without regard
to any accumulation distribution determined for any succeeding
taxable year.
(d) Rule when information is not available
If adequate records are not available to determine the proper
application of this subpart to an amount distributed by a trust,
such amount shall be deemed to be an accumulation distribution
consisting of undistributed net income earned during the earliest
preceding taxable year of the trust in which it can be established
that the trust was in existence.
(e) Denial of refund to trusts and beneficiaries
No refund or credit shall be allowed to a trust or a beneficiary
of such trust for any preceding taxable year by reason of a
distribution deemed to have been made by such trust in such year
under this section.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 224; Pub. L. 87-834, Sec. 7(c),
Oct. 16, 1962, 76 Stat. 986; Pub. L. 91-172, title III, Sec.
331(a), Dec. 30, 1969, 83 Stat. 593; Pub. L. 94-455, title VII,
Sec. 701(a)(2), Oct. 4, 1976, 90 Stat. 1577; Pub. L. 95-600, title
IV, Sec. 421(d), Nov. 6, 1978, 92 Stat. 2875; Pub. L. 96-222, title
I, Sec. 104(a)(4)(H)(vi), Apr. 1, 1980, 94 Stat. 218.)
-MISC1-
AMENDMENTS
1980 - Subsec. (c). Pub. L. 96-222 inserted "(other than the tax
imposed by section 55)" after "equal to the taxes".
1978 - Subsec. (b). Pub. L. 95-600 inserted "(other than the tax
imposed by section 55)" after "equal to the taxes".
1976 - Subsec. (e). Pub. L. 94-455 added subsec. (e).
1969 - Subsec. (a). Pub. L. 91-172 substituted in first sentence
"In the case of a trust which is subject to subpart (C)" for "In
the case of a trust (other than a foreign trust created by a United
States person) which for a taxable year beginning after December
31, 1953, is subject to subpart (C)", "for a taxable year" for "for
such taxable year", and "undistributed net income for all earlier
preceding taxable years" for "undistributed net incomes for any
taxable years intervening between the taxable year with respect to
which the accumulation distribution is determined and such
preceding taxable year" and in second sentence "for such" for "of
such", inserted in first sentence ", commencing with the earliest
of such years," after "preceding taxable years", struck out "5"
before "preceding taxable years" in first and third sentences and
last sentence which read as follows: "In the case of a foreign
trust created by a United States person, this subsection shall
apply to the preceding taxable years of the trust without regard to
any provision of the preceding sentences which would (but for this
sentence) limit its application to the 5 preceding taxable years."
Subsec. (b). Pub. L. 91-172 inserted "attributable to the
undistributed net income" after "taxable year" in second sentence
and "attributable to such undistributed net income" before "shall
be computed" in third sentence.
Subsec. (c). Pub. L. 91-172 inserted "attributable to the
undistributed net income" before "multiplied by the ratio" in
second sentence and "attributable to such undistributed net income"
before "shall be computed" in third sentence.
Subsec. (d). Pub. L. 91-172 added subsec. (d).
1962 - Subsec. (a). Pub. L. 87-834 inserted "(other than a
foreign trust created by a United States person)" after "In the
case of a trust", and inserted sentence making this subsection
applicable, in the case of a foreign trust created by a United
States person, to the preceding taxable years of the trust without
regard to any provision of the preceding sentences of this
subsection which would (but for this sentence) limit its
application to the 5 preceding taxable years.
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-222 effective, except as otherwise
provided, as if it had been included in the provisions of the
Revenue Act of 1978, Pub. L. 95-600, to which such amendment
relates, see section 201 of Pub. L. 96-222, set out as a note under
section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by Pub. L. 95-600 applicable to taxable years beginning
after Dec. 31, 1978, see section 421(g) of Pub. L. 95-600, set out
as a note under section 5 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable to distributions made in
taxable years beginning after Dec. 31, 1975, see section 701(h) of
Pub. L. 94-455, set out as a note under section 667 of this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable to taxable years beginning
after Dec. 31, 1968, except that for taxable years of a trust
beginning before Jan. 1, 1970, first sentence of subsec. (a) not
applicable and amount of accumulation distribution stated, see
section 331(d)(1), (2)(B) of Pub. L. 91-172, set out as a note
under section 665 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-834 applicable with respect to
distributions made after Dec. 31, 1962, see section 7(j) of Pub. L.
87-834, set out as a note under section 643 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 164, 665, 667, 668, 904
of this title.
-End-
-CITE-
26 USC Sec. 667 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart D - Treatment of Excess Distributions by Trusts
-HEAD-
Sec. 667. Treatment of amounts deemed distributed by trust in
preceding years
-STATUTE-
(a) General rule
The total of the amounts which are treated under section 666 as
having been distributed by a trust in a preceding taxable year
shall be included in the income of a beneficiary of the trust when
paid, credited, or required to be distributed to the extent that
such total would have been included in the income of such
beneficiary under section 662(a)(2) (and, with respect to any
tax-exempt interest to which section 103 applies, under section
662(b)) if such total had been paid to such beneficiary on the last
day of such preceding taxable year. The tax imposed by this
subtitle on a beneficiary for a taxable year in which any such
amount is included in his income shall be determined only as
provided in this section and shall consist of the sum of -
(1) a partial tax computed on the taxable income reduced by an
amount equal to the total of such amounts, at the rate and in the
manner as if this section had not been enacted,
(2) a partial tax determined as provided in subsection (b) of
this section, and
(3) in the case of a foreign trust, the interest charge
determined as provided in section 668.
(b) Tax on distribution
(1) In general
The partial tax imposed by subsection (a)(2) shall be
determined.
(A) by determining the number of preceding taxable years of
the trust on the last day of which an amount is deemed under
section 666(a) to have been distributed,
(B) by taking from the 5 taxable years immediately preceding
the year of the accumulation distribution the 1 taxable year
for which the beneficiary's taxable income was the highest and
the 1 taxable year for which his taxable income was the lowest,
(C) by adding to the beneficiary's taxable income for each of
the 3 taxable years remaining after the application of
subparagraph (B) an amount determined by dividing the amount
deemed distributed under section 666 and required to be
included in income under subsection (a) by the number of
preceding taxable years determined under subparagraph (A), and
(D) by determining the average increase in tax for the 3
taxable years referred to in subparagraph (C) resulting from
the application of such subparagraph.
The partial tax imposed by subsection (a)(2) shall be the excess
(if any) of the average increase in tax determined under
subparagraph (D), multiplied by the number of preceding taxable
years determined under subparagraph (A), over the amount of taxes
(other than the amount of taxes described in section 665(d)(2))
deemed distributed to the beneficiary under sections 666(b) and
(c).
(2) Treatment of loss years
For purposes of paragraph (1), the taxable income of the
beneficiary for any taxable year shall be deemed to be not less
than zero.
(3) Certain preceding taxable years not taken into account
For purposes of paragraph (1), if the amount of the
undistributed net income deemed distributed in any preceding
taxable year of the trust is less than 25 percent of the amount
of the accumulation distribution divided by the number of
preceding taxable years to which the accumulation distribution is
allocated under section 666(a), the number of preceding taxable
years of the trust with respect to which an amount is deemed
distributed to a beneficiary under section 666(a) shall be
determined without regard to such year.
(4) Effect of other accumulation distributions
In computing the partial tax under paragraph (1) for any
beneficiary, the income of such beneficiary for each of his prior
taxable years shall include amounts previously deemed distributed
to such beneficiary in such year under section 666 as a result of
prior accumulation distributions (whether from the same or
another trust).
(5) Multiple distributions in the same taxable year
In the case of accumulation distributions made from more than
one trust which are includible in the income of a beneficiary in
the same taxable year, the distributions shall be deemed to have
been made consecutively in whichever order the beneficiary shall
determine.
(6) Adjustment in partial tax for estate and generation-skipping
transfer taxes attributable to partial tax
(A) In general
The partial tax shall be reduced by an amount which is equal
to the pre-death portion of the partial tax multiplied by a
fraction -
(i) the numerator of which is that portion of the tax
imposed by chapter 11 or 13, as the case may be, which is
attributable (on a proportionate basis) to amounts included
in the accumulation distribution, and
(ii) the denominator of which is the amount of the
accumulation distribution which is subject to the tax imposed
by chapter 11 or 13, as the case may be.
(B) Partial tax determined without regard to this paragraph
For purposes of this paragraph, the term "partial tax" means
the partial tax imposed by subsection (a)(2) determined under
this subsection without regard to this paragraph.
(C) Pre-death portion
For purposes of this paragraph, the pre-death portion of the
partial tax shall be an amount which bears the same ratio to
the partial tax as the portion of the accumulation distribution
which is attributable to the period before the date of the
death of the decedent or the date of the generation-skipping
transfer bears to the total accumulation distribution.
(c) Special rule for multiple trusts
(1) In general
If, in the same prior taxable year of the beneficiary in which
any part of the accumulation distribution from a trust
(hereinafter in this paragraph referred to as "third trust") is
deemed under section 666(a) to have been distributed to such
beneficiary, some part of prior distributions by each of 2 or
more other trusts is deemed under section 666(a) to have been
distributed to such beneficiary, then subsections (b) and (c) of
section 666 shall not apply with respect to such part of the
accumulation distribution from such third trust.
(2) Accumulation distributions from trust not taken into account
unless they equal or exceed $1,000
For purposes of paragraph (1), an accumulation distribution
from a trust to a beneficiary shall be taken into account only if
such distribution, when added to any prior accumulation
distributions from such trust which are deemed under section
666(a) to have been distributed to such beneficiary for the same
prior taxable year of the beneficiary, equals or exceeds $1,000.
(d) Special rules for foreign trust
(1) Foreign tax deemed paid by beneficiary
(A) In general
In determining the increase in tax under subsection (b)(1)(D)
for any computation year, the taxes described in section
665(d)(2) which are deemed distributed under section 666(b) or
(c) and added under subsection (b)(1)(C) to the taxable income
of the beneficiary for any computation year shall, except as
provided in subparagraphs (B) and (C), be treated as a credit
against the increase in tax for such computation year under
subsection (b)(1)(D).
(B) Deduction in lieu of credit
If the beneficiary did not choose the benefits of subpart A
of part III of subchapter N with respect to the computation
year, the beneficiary may in lieu of treating the amounts
described in subparagraph (A) (without regard to subparagraph
(C)) as a credit may treat such amounts as a deduction in
computing the beneficiary's taxable income under subsection
(b)(1)(C) for the computation year.
(C) Limitation on credit; retention of character
(i) Limitation on credit
For purposes of determining under subparagraph (A) the
amount treated as a credit for any computation year, the
limitations under subpart A of part III of subchapter N shall
be applied separately with respect to amounts added under
subsection (b)(1)(C) to the taxable income of the beneficiary
for such computation year. For purposes of computing the
increase in tax under subsection (b)(1)(D) for any
computation year for which the beneficiary did not choose the
benefits of subpart A of part III of subchapter N, the
beneficiary shall be treated as having chosen such benefits
for such computation year.
(ii) Retention of character
The items of income, deduction, and credit of the Trust
shall retain their character (subject to the application of
section 904(f)(5)) to the extent necessary to apply this
paragraph.
(D) Computation year
For purposes of this paragraph, the term "computation year"
means any of the three taxable years remaining after
application of subsection (b)(1)(B).
(e) Retention of character of amounts distributed from accumulation
trust to nonresident aliens and foreign corporations
In the case of a distribution from a trust to a nonresident alien
individual or to a foreign corporation, the first sentence of
subsection (a) shall be applied as if the reference to the
determination of character under section 662(b) applied to all
amounts instead of just to tax-exempt interest.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 225; Pub. L. 91-172, title III,
Sec. 331(a), Dec. 30, 1969, 83 Stat. 594; Pub. L. 94-455, title
VII, Sec. 701(a)(1), title X, Sec. 1014(a), Oct. 4, 1976, 90 Stat.
1575, 1617; Pub. L. 95-30, title I, Sec. 102(b)(8), May 23, 1977,
91 Stat. 138; Pub. L. 95-600, title VII, Secs. 701(q)(1)(B), (C),
(r)(1), 702(o)(1), Nov. 6, 1978, 92 Stat. 2909, 2910, 2936; Pub. L.
99-514, title I, Sec. 104(b)(10), Oct. 22, 1986, 100 Stat. 2105.)
-MISC1-
AMENDMENTS
1986 - Subsec. (b)(2). Pub. L. 99-514 amended par. (2) generally.
Prior to amendment, par. (2) read as follows: "For purposes of
paragraph (1), the taxable income of the beneficiary for any
taxable year shall be deemed to be not less than -
"(A) in the case of a beneficiary who is an individual, the
zero bracket amount for such year, or
"(B) in the case of a beneficiary who is a corporation, zero."
1978 - Subsec. (b)(1). Pub. L. 95-600, Sec. 701(q)(1)(C),
inserted in last sentence "(other than the amount of taxes
described in section 665(d)(2))" after "taxes".
Subsec. (b)(6). Pub. L. 95-600, Sec. 702(o)(1), added par. (6).
Subsec. (d). Pub. L. 95-600, Sec. 701(q)(1)(B), added subsec.
(d).
Subsec. (e). Pub. L. 95-600, Sec. 701(r)(1), added subsec. (e).
1977 - Subsec. (b)(2). Pub. L. 95-30 substituted "not less than
(A) in the case of a beneficiary who is an individual, the zero
bracket amount for such year, or (B) in the case of a beneficiary
who is a corporation, zero" for "not less than zero".
1976 - Pub. L. 94-455, Secs. 701(a)(1), 1014(a), substituted
provisions relating to the treatment of amounts deemed distributed
by trust in preceding years for provisions that no refund or credit
be allowed to a trust for any preceding taxable year by reason of a
distribution deemed to have been made by such trust in such year
under section 666 or 669 and that there be allowed as a credit
against the tax imposed by this subtitle on the beneficiary an
amount equal to the amount of the taxes deemed distributed to such
beneficiary by the trust under sections 666(b) and (c) and 669(d)
and (e) during preceding taxable years of the trust on the last day
of which the beneficiary was in being, reduced by the amount of the
taxes deemed distributed to such beneficiary for such preceding
taxable years to the extent that such taxes are taken into account
under sections 668(b)(1) and 669(b) in determining the amount of
the tax imposed by section 668. See section 666(e) of this title.
1969 - Subsec. (a). Pub. L. 91-172 incorporated existing
provisions of first sentence in provisions designated as subsec.
(a), included distributions made under section 669 of this title,
and struck out provisions for credit of taxes imposed on the trust
against tax of beneficiary. See subsec. (b) of this section.
Subsec. (b). Pub. L. 91-172 incorporated provision of first
sentence for credit of taxes imposed on the trust against tax of
beneficiary, and provided for interest free credit and method of
computation of its amount. The second sentence had provided that
the amount of taxes which may not be refunded or credited to the
trust shall be an amount equal to the excess of (1) the taxes
imposed on the trust for any preceding taxable year (computed
without regard to the accumulation distribution for the taxable
year) over (2) the amount of taxes for such preceding taxable year
imposed on the undistributed portion of distributable net income of
the trust for such preceding taxable year after the application of
this subpart on account of the accumulation distribution determined
for such taxable year.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to taxable years beginning
after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by section 701(q)(1)(B), (C) of Pub. L. 95-600
applicable to distributions made in taxable years beginning after
Dec. 31, 1975, see section 701(q)(3)(A) of Pub. L. 95-600, set out
as a note under section 665 of this title.
Section 702(o)(2) of Pub. L. 95-600, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The
amendment made by paragraph (1) [amending this section] shall apply
-
"(A) in the case of the tax imposed by chapter 11 of the
Internal Revenue Code of 1986 [formerly I.R.C. 1954, section 2001
et seq. of this title], to the estates of decedents dying after
December 31, 1979, and
"(B) in the case of the tax imposed by chapter 13 [section 2601
et seq. of this title], to any generation-skipping transfer
(within the meaning of section 2611(a) of such Code) made after
June 11, 1976."
Section 701(r)(2) of Pub. L. 95-600 provided that: "The amendment
made by paragraph (1) [amending this section] shall apply to
distributions made in taxable years beginning after December 31,
1975."
EFFECTIVE DATE OF 1977 AMENDMENT
Amendment by Pub. L. 95-30 applicable to taxable years beginning
after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out
as a note under section 1 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Section 701(h) of Pub. L. 94-455 provided that: "The amendments
made by subsections (a), (b), (c), (d), and (f) of this section
[amending this section and sections 665, 666, 1302, and 6401 of
this title and repealing sections 668 and 669 of this title] shall
apply to distributions made in taxable years beginning after
December 31, 1975. The amendments made by subsection (e) of this
section [enacting section 644 of this title and amending section
641 of this title] shall apply to transfers in trust made after May
21, 1976."
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable to taxable years beginning
after Dec. 31, 1968, see section 331(d) of Pub. L. 91-172, set out
as a note under section 665 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 665, 668, 904 of this
title.
-End-
-CITE-
26 USC Sec. 668 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart D - Treatment of Excess Distributions by Trusts
-HEAD-
Sec. 668. Interest charge on accumulation distributions from
foreign trusts
-STATUTE-
(a) General rule
For purposes of the tax determined under section 667(a) -
(1) Interest determined using underpayment rates
The interest charge determined under this section with respect
to any distribution is the amount of interest which would be
determined on the partial tax computed under section 667(b) for
the period described in paragraph (2) using the rates and the
method under section 6621 applicable to underpayments of tax.
(2) Period
For purposes of paragraph (1), the period described in this
paragraph is the period which begins on the date which is the
applicable number of years before the date of the distribution
and which ends on the date of the distribution.
(3) Applicable number of years
For purposes of paragraph (2) -
(A) In general
The applicable number of years with respect to a distribution
is the number determined by dividing -
(i) the sum of the products described in subparagraph (B)
with respect to each undistributed income year, by
(ii) the aggregate undistributed net income.
The quotient determined under the preceding sentence shall be
rounded under procedures prescribed by the Secretary.
(B) Product described
For purposes of subparagraph (A), the product described in
this subparagraph with respect to any undistributed income year
is the product of -
(i) the undistributed net income for such year, and
(ii) the sum of the number of taxable years between such
year and the taxable year of the distribution (counting in
each case the undistributed income year but not counting the
taxable year of the distribution).
(4) Undistributed income year
For purposes of this subsection, the term "undistributed income
year" means any prior taxable year of the trust for which there
is undistributed net income, other than a taxable year during all
of which the beneficiary receiving the distribution was not a
citizen or resident of the United States.
(5) Determination of undistributed net income
Notwithstanding section 666, for purposes of this subsection,
an accumulation distribution from the trust shall be treated as
reducing proportionately the undistributed net income for
undistributed income years.
(6) Periods before 1996
Interest for the portion of the period described in paragraph
(2) which occurs before January 1, 1996, shall be determined -
(A) by using an interest rate of 6 percent, and
(B) without compounding until January 1, 1996.
(b) Limitation
The total amount of the interest charge shall not, when added to
the total partial tax computed under section 667(b), exceed the
amount of the accumulation distribution (other than the amount of
tax deemed distributed by section 666(b) or (c)) in respect of
which such partial tax was determined.
(c) Interest charge not deductible
The interest charge determined under this section shall not be
allowed as a deduction for purposes of any tax imposed by this
title.
-SOURCE-
(Added Pub. L. 94-455, title X, Sec. 1014(b), Oct. 4, 1976, 90
Stat. 1617; amended Pub. L. 101-508, title XI, Sec. 11802(f)(3),
Nov. 5, 1990, 104 Stat. 1388-530; Pub. L. 104-188, title I, Sec.
1906(a), Aug. 20, 1996, 110 Stat. 1914.)
-MISC1-
PRIOR PROVISIONS
A prior section 668, acts Aug. 16, 1954, ch. 736, 68A Stat. 225;
Oct. 16, 1962, Pub. L. 87-834, Sec. 7(d), 76 Stat. 986; Dec. 30,
1969, Pub. L. 91-172, title III, Sec. 331(a), 83 Stat. 594, related
to treatment of amounts deemed distributed in preceding years,
prior to repeal by Pub. L. 94-455, title VII, Sec. 701(a)(3), Oct.
4, 1976, 90 Stat. 1577. See section 667 of this title.
AMENDMENTS
1996 - Subsec. (a). Pub. L. 104-188 reenacted heading without
change and amended text generally. Prior to amendment, text read as
follows: "For purposes of the tax determined under section 667(a),
the interest charge is an amount equal to 6 percent of the partial
tax computed under section 667(b) multiplied by a fraction -
"(1) the numerator of which is the sum of the number of taxable
years between each taxable year to which the distribution is
allocated under section 666(a) and the taxable year of the
distribution (counting in each case the taxable year to which the
distribution is allocated but not counting the taxable year of
the distribution), and
"(2) the denominator of which is the number of taxable years to
which the distribution is allocated under section 666(a)."
1990 - Subsec. (c). Pub. L. 101-508 substituted heading for one
which read "Special rules" and amended text generally, restating
provisions of former par. (1) as entire subsection and striking out
former par. (2) which provided that for purposes of this section,
undistributed net income existing in a trust as of January 1, 1977,
would be treated as allocated under section 666(a) to the first
taxable year beginning after December 31, 1976.
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1906(d)(1) of Pub. L. 104-188 provided that: "The
amendment made by subsection (a) [amending this section] shall
apply to distributions after the date of the enactment of this Act
[Nov. 20, 1996]."
EFFECTIVE DATE
Section 1014(d) of Pub. L. 94-455 provided that: "The amendments
made by this section [enacting this section and amending section
667 of this title] shall apply to taxable years beginning after
December 31, 1976."
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 667, 6048 of this title.
-End-
-CITE-
26 USC Sec. 669 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart D - Treatment of Excess Distributions by Trusts
-HEAD-
[Sec. 669. Repealed. Pub. L. 94-455, title VII, Sec. 701(d)(1),
Oct. 4, 1976, 90 Stat. 1578]
-MISC1-
Section, acts Oct. 16, 1962, Pub. L. 87-834, Sec. 7(e), 76 Stat.
986; Dec. 30, 1969, Pub. L. 91-172, title III, Sec. 331(a), 83
Stat. 596, related to the treatment of capital gain deemed
distributed in preceding years.
EFFECTIVE DATE OF REPEAL
Repeal applicable to distributions made in taxable years
beginning after Dec. 31, 1975, see section 701(h) of Pub. L.
94-455, set out as an Effective Date of 1976 Amendment note under
section 667 of this title.
-End-
-CITE-
26 USC Subpart E - Grantors and Others Treated as
Substantial Owners 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart E - Grantors and Others Treated as Substantial Owners
-HEAD-
SUBPART E - GRANTORS AND OTHERS TREATED AS SUBSTANTIAL OWNERS
-MISC1-
Sec.
671. Trust income, deductions, and credits attributable to
grantors and others as substantial owners.
672. Definitions and rules.
673. Reversionary interests.
674. Power to control beneficial enjoyment.
675. Administrative powers.
676. Power to revoke.
677. Income for benefit of grantor.
678. Person other than grantor treated as substantial
owner.
679. Foreign trusts having one or more United States
beneficiaries.
AMENDMENTS
1976 - Pub. L. 94-455, title X, Sec. 1013(e)(1), Oct. 4, 1976, 90
Stat. 1616, added item 679.
-SECREF-
SUBPART REFERRED TO IN OTHER SECTIONS
This subpart is referred to in sections 402, 665, 685, 901, 1312,
1361, 1445, 2511, 6048, 6654 of this title.
-End-
-CITE-
26 USC Sec. 671 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart E - Grantors and Others Treated as Substantial Owners
-HEAD-
Sec. 671. Trust income, deductions, and credits attributable to
grantors and others as substantial owners
-STATUTE-
Where it is specified in this subpart that the grantor or another
person shall be treated as the owner of any portion of a trust,
there shall then be included in computing the taxable income and
credits of the grantor or the other person those items of income,
deductions, and credits against tax of the trust which are
attributable to that portion of the trust to the extent that such
items would be taken into account under this chapter in computing
taxable income or credits against the tax of an individual. Any
remaining portion of the trust shall be subject to subparts A
through D. No items of a trust shall be included in computing the
taxable income and credits of the grantor or of any other person
solely on the grounds of his dominion and control over the trust
under section 61 (relating to definition of gross income) or any
other provision of this title, except as specified in this subpart.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 226.)
-MISC1-
CERTAIN ENTITIES NOT TREATED AS CORPORATIONS
Pub. L. 99-514, title VI, Sec. 646, Oct. 22, 1986, 100 Stat.
2292, as amended by Pub. L. 100-647, title I, Sec. 1006(k), Nov.
10, 1988, 102 Stat. 3411, provided that:
"(a) General Rule. - For purposes of the Internal Revenue Code of
1986, if the entity described in subsection (b) makes an election
under subsection (c), such entity shall be treated as a trust to
which subpart E of part 1 of subchapter J of chapter 1 of such Code
applies.
"(b) Entity. - An entity is described in this subsection if -
"(1) such entity was created in 1906 as a common law trust and
is governed by the trust laws of the State of Minnesota,
"(2) such entity is exclusively engaged in the leasing of
mineral property and activities incidental thereto, and
"(3) income interests in such entity are publicly traded as of
October 22, 1986, on a national stock exchange.
"(c) Election. -
"(1) In general. - An election under this subsection to have
the provisions of this section apply -
"(A) shall be made by the board of trustees of the entity
before January 1, 1991, and
"(B) shall not be valid unless accompanied by an agreement
described in paragraph (2).
"(2) Agreement. -
"(A) In general. - The agreement described in this paragraph
is a written agreement signed by the board of trustees of the
entity which provides that the entity will not acquire any
additional property other than property described in
subparagraph (B).
"(B) Permissible acquisitions. - Property is described in
this paragraph if it is -
"(i) surface rights to property the acquisition of which -
"(I) is necessary to mine mineral rights held on October 22,
1986, and
"(II) is required by a written binding agreement between the
entity and an unrelated person entered into on or before
October 22, 1986,
"(ii) surface rights to property which are not described in
clause (i) and which -
"(I) are acquired in an exchange to which section 1031
[probably means section 1031 of this title] applies, and
"(II) are necessary to mine mineral rights held on October 22,
1986,
"(iii) tangible personal property incidental to the leasing
of mineral property and activities incidental thereto, or
"(iv) part of any required reserves of the entity.
"(3) Beginning of period for which election is in effect. - The
period during which an election is in effect under this
subsection shall begin on the 1st day of the 1st taxable year
beginning after the date of the enactment of this Act [Oct. 22,
1986] and following the taxable year in which the election is
made.
"(4) Manner of election. - Any election under this subsection
shall be made in such manner as the Secretary of the Treasury or
his delegate may prescribe.
"(d) Special Rules for Taxation of Trust. -
"(1) Election treated as a liquidation. - If an election is
made under subsection (c) with respect to any entity -
"(A) such entity shall be treated as having been liquidated
into a trust immediately before the period described in
subsection (c)(3) in a liquidation to which section 333 of the
Internal Revenue Code of 1954 (as in effect before the
amendments made by this Act) applies, and
"(B) for purposes of section 333 of such Code (as so in
effect) -
"(i) any person holding an income interest in such entity
as of such time shall be treated as a qualified electing
shareholder, and
"(ii) the earnings and profits, and the value of money or
stock or securities, of such entity shall be apportioned
ratably among persons described in clause (i).
The amendments made by subtitle D of this title [subtitle D
(Secs. 631-634) of title VI of Pub. L. 99-514, see Tables for
classification] and section 1804 of this Act [see Tables for
classification] shall not apply to any liquidation under this
paragraph.
"(2) Termination of election. - If an entity ceases to be
described in subsection (b) or violates any term of the agreement
described in subsection (c)(2), the entity shall, for purposes of
the Internal Revenue Code of 1986, be treated as a corporation
for the taxable year in which such cessation or violation occurs
and for all subsequent taxable years.
"(3) Trust ceasing to exist. - Paragraph (2) shall not apply if
the trust ceases to be described in subsection (b) or violates
the agreement in subsection (c)(2) because the trust ceases to
exist.
"(e) Special Rule for Persons Holding Income Interests. - In
applying subpart E of part I of subchapter J of chapter 1 of the
Internal Revenue Code of 1986 to any entity to which this section
applies -
"(1) a reversionary interest shall not be taken into account
until it comes into possession, and
"(2) all items of income, gain, loss, deduction, and credit
shall be allocated to persons holding income interests for the
period of the allocation."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 170, 678, 684 of this
title.
-End-
-CITE-
26 USC Sec. 672 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart E - Grantors and Others Treated as Substantial Owners
-HEAD-
Sec. 672. Definitions and rules
-STATUTE-
(a) Adverse party
For purposes of this subpart, the term "adverse party" means any
person having a substantial beneficial interest in the trust which
would be adversely affected by the exercise or nonexercise of the
power which he possesses respecting the trust. A person having a
general power of appointment over the trust property shall be
deemed to have a beneficial interest in the trust.
(b) Nonadverse party
For purposes of this subpart, the term "nonadverse party" means
any person who is not an adverse party.
(c) Related or subordinate party
For purposes of this subpart, the term "related or subordinate
party" means any nonadverse party who is -
(1) the grantor's spouse if living with the grantor;
(2) any one of the following: The grantor's father, mother,
issue, brother or sister; an employee of the grantor; a
corporation or any employee of a corporation in which the stock
holdings of the grantor and the trust are significant from the
viewpoint of voting control; a subordinate employee of a
corporation in which the grantor is an executive.
For purposes of subsection (f) and sections 674 and 675, a related
or subordinate party shall be presumed to be subservient to the
grantor in respect of the exercise or nonexercise of the powers
conferred on him unless such party is shown not to be subservient
by a preponderance of the evidence.
(d) Rule where power is subject to condition precedent
A person shall be considered to have a power described in this
subpart even though the exercise of the power is subject to a
precedent giving of notice or takes effect only on the expiration
of a certain period after the exercise of the power.
(e) Grantor treated as holding any power or interest of grantor's
spouse
(1) In general
For purposes of this subpart, a grantor shall be treated as
holding any power or interest held by -
(A) any individual who was the spouse of the grantor at the
time of the creation of such power or interest, or
(B) any individual who became the spouse of the grantor after
the creation of such power or interest, but only with respect
to periods after such individual became the spouse of the
grantor.
(2) Marital status
For purposes of paragraph (1)(A), an individual legally
separated from his spouse under a decree of divorce or of
separate maintenance shall not be considered as married.
(f) Subpart not to result in foreign ownership
(1) In general
Notwithstanding any other provision of this subpart, this
subpart shall apply only to the extent such application results
in an amount (if any) being currently taken into account
(directly or through 1 or more entities) under this chapter in
computing the income of a citizen or resident of the United
States or a domestic corporation.
(2) Exceptions
(A) Certain revocable and irrevocable trusts
Paragraph (1) shall not apply to any portion of a trust if -
(i) the power to revest absolutely in the grantor title to
the trust property to which such portion is attributable is
exercisable solely by the grantor without the approval or
consent of any other person or with the consent of a related
or subordinate party who is subservient to the grantor, or
(ii) the only amounts distributable from such portion
(whether income or corpus) during the lifetime of the grantor
are amounts distributable to the grantor or the spouse of the
grantor.
(B) Compensatory trusts
Except as provided in regulations, paragraph (1) shall not
apply to any portion of a trust distributions from which are
taxable as compensation for services rendered.
(3) Special rules
Except as otherwise provided in regulations prescribed by the
Secretary -
(A) a controlled foreign corporation (as defined in section
957) shall be treated as a domestic corporation for purposes of
paragraph (1), and
(B) paragraph (1) shall not apply for purposes of applying
section 1297.
(4) Recharacterization of purported gifts
In the case of any transfer directly or indirectly from a
partnership or foreign corporation which the transferee treats as
a gift or bequest, the Secretary may recharacterize such transfer
in such circumstances as the Secretary determines to be
appropriate to prevent the avoidance of the purposes of this
subsection.
(5) Special rule where grantor is foreign person
If -
(A) but for this subsection, a foreign person would be
treated as the owner of any portion of a trust, and
(B) such trust has a beneficiary who is a United States
person,
such beneficiary shall be treated as the grantor of such portion
to the extent such beneficiary has made (directly or indirectly)
transfers of property (other than in a sale for full and adequate
consideration) to such foreign person. For purposes of the
preceding sentence, any gift shall not be taken into account to
the extent such gift would be excluded from taxable gifts under
section 2503(b).
(6) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this
subsection, including regulations providing that paragraph (1)
shall not apply in appropriate cases.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 226; Pub. L. 99-514, title XIV,
Sec. 1401(a), Oct. 22, 1986, 100 Stat. 2711; Pub. L. 100-647, title
I, Sec. 1014(a)(1), Nov. 10, 1988, 102 Stat. 3559; Pub. L. 101-508,
title XI, Sec. 11343(a), Nov. 5, 1990, 104 Stat. 1388-472; Pub. L.
104-188, title I, Sec. 1904(a), Aug. 20, 1996, 110 Stat. 1910; Pub.
L. 105-206, title VI, Sec. 6011(c)(1), July 22, 1998, 112 Stat.
818.)
-MISC1-
AMENDMENTS
1998 - Subsec. (f)(3)(B). Pub. L. 105-206 substituted "section
1297" for "section 1296".
1996 - Subsec. (c). Pub. L. 104-188, Sec. 1904(a)(2), inserted
"subsection (f) and" before "sections 674" in closing provisions.
Subsec. (f). Pub. L. 104-188, Sec. 1904(a)(1), amended subsec.
(f) generally. Prior to amendment, subsec. (f) read as follows:
"Special Rule Where Grantor is Foreign Person. -
"(1) In general. - If -
"(A) but for this subsection, a foreign person would be
treated as the owner of any portion of a trust, and
"(B) such trust has a beneficiary who is a United States
person,
such beneficiary shall be treated as the grantor of such portion
to the extent such beneficiary has made transfers of property by
gift (directly or indirectly) to such foreign person. For
purposes of the preceding sentence, any gift shall not be taken
into account to the extent such gift would be excluded from
taxable gifts under section 2503(b).
"(2) Regulations. - The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of this
subsection."
1990 - Subsec. (f). Pub. L. 101-508 added subsec. (f).
1988 - Subsec. (e). Pub. L. 100-647 amended subsec. (e)
generally. Prior to amendment, subsec. (e) read as follows: "For
purposes of this subpart, if a grantor's spouse is living with the
grantor at the time of the creation of any power or interest held
by such spouse, the grantor shall be treated as holding such power
or interest."
1986 - Subsec. (e). Pub. L. 99-514 added subsec. (e).
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 effective Aug. 20, 1996, with
exception for certain trusts, see section 1904(d) of Pub. L.
104-188, set out as a note under section 643 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11343(b) of Pub. L. 101-508 provided that: "The
amendments made by this section [amending this section] shall apply
to -
"(1) any trust created after the date of the enactment of this
Act [Nov. 5, 1990], and
"(2) any portion of a trust created on or before such date
which is attributable to amounts contributed to the trust after
such date."
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1401(b) of Pub. L. 99-514 provided that: "The amendment
made by this section [amending this section] shall apply with
respect to transfers in trust made after March 1, 1986."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 646, 665, 674, 675, 678,
901, 2035 of this title.
-End-
-CITE-
26 USC Sec. 673 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart E - Grantors and Others Treated as Substantial Owners
-HEAD-
Sec. 673. Reversionary interests
-STATUTE-
(a) General rule
The grantor shall be treated as the owner of any portion of a
trust in which he has a reversionary interest in either the corpus
or the income therefrom, if, as of the inception of that portion of
the trust, the value of such interest exceeds 5 percent of the
value of such portion.
(b) Reversionary interest taking effect at death of minor lineal
descendant beneficiary
In the case of any beneficiary who -
(1) is a lineal descendant of the grantor, and
(2) holds all of the present interests in any portion of a
trust,
the grantor shall not be treated under subsection (a) as the owner
of such portion solely by reason of a reversionary interest in such
portion which takes effect upon the death of such beneficiary
before such beneficiary attains age 21.
(c) Special rule for determining value of reversionary interest
For purposes of subsection (a), the value of the grantor's
reversionary interest shall be determined by assuming the maximum
exercise of discretion in favor of the grantor.
(d) Postponement of date specified for reacquisition
Any postponement of the date specified for the reacquisition of
possession or enjoyment of the reversionary interest shall be
treated as a new transfer in trust commencing with the date on
which the postponement is effective and terminating with the date
prescribed by the postponement. However, income for any period
shall not be included in the income of the grantor by reason of the
preceding sentence if such income would not be so includible in the
absence of such postponement.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 227; Pub. L. 91-172, title II,
Sec. 201(c), Dec. 30, 1969, 83 Stat. 560; Pub. L. 99-514, title
XIV, Sec. 1402(a), Oct. 22, 1986, 100 Stat. 2711; Pub. L. 100-647,
title I, Sec. 1014(b), Nov. 10, 1988, 102 Stat. 3559.)
-MISC1-
AMENDMENTS
1988 - Subsecs. (c), (d). Pub. L. 100-647 added subsecs. (c) and
(d).
1986 - Pub. L. 99-514 amended section generally, substituting
"the value of such interest exceeds 5 percent of the value of such
portion" for "the interest will or may reasonably be expected to
take effect in possession or enjoyment within 10 years commencing
with the date of the transfer of that portion of the trust" in
subsec. (a), adding subsec. (b), striking out subsec. (c) which
provided that the grantor not be treated under subsec. (a) as the
owner of any portion of a trust where his reversionary interest in
such portion was not to take effect in possession or enjoyment
until the death of the persons to whom the income therefrom was
payable, and subsec. (d) which provided that any postponement of
the date specified for the reacquisition of possession or enjoyment
of the reversionary interest be treated as a new transfer in trust
commencing with the date on which the postponement was effected and
terminating with the date prescribed by the postponement.
1969 - Subsec. (b). Pub. L. 91-172 struck out provisions relating
to trusts where the income was payable to a charitable beneficiary
for at least a two-year period.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Section 1402(c) of Pub. L. 99-514 provided that:
"(1) In general. - Except as provided in paragraph (2), the
amendments made by this section [amending this section and sections
674, 676, and 677 of this title] shall apply with respect to
transfers in trust made after March 1, 1986.
"(2) Transfers pursuant to property settlement agreement. - The
amendments made by this section shall not apply to any transfer in
trust made after March 1, 1986, pursuant to a binding property
settlement agreement entered into on or before March 1, 1986, which
required the taxpayer to establish a grantor trust and for the
transfer of a specified sum of money or property to the trust by
the taxpayer. This paragraph shall apply only to the extent of the
amount required to be transferred under the agreement described in
the preceding sentence."
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable to transfers in trust made
after April 22, 1969, see section 201(g)(3) of Pub. L. 91-172, set
out as a note under section 170 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 674, 676, 677, 678 of
this title.
-End-
-CITE-
26 USC Sec. 674 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart E - Grantors and Others Treated as Substantial Owners
-HEAD-
Sec. 674. Power to control beneficial enjoyment
-STATUTE-
(a) General rule
The grantor shall be treated as the owner of any portion of a
trust in respect of which the beneficial enjoyment of the corpus or
the income therefrom is subject to a power of disposition,
exercisable by the grantor or a nonadverse party, or both, without
the approval or consent of any adverse party.
(b) Exceptions for certain powers
Subsection (a) shall not apply to the following powers regardless
of by whom held:
(1) Power to apply income to support of a dependent
A power described in section 677(b) to the extent that the
grantor would not be subject to tax under that section.
(2) Power affecting beneficial enjoyment only after occurrence of
event
A power, the exercise of which can only affect the beneficial
enjoyment of the income for a period commencing after the
occurrence of an event such that a grantor would not be treated
as the owner under section 673 if the power were a reversionary
interest; but the grantor may be treated as the owner after the
occurrence of the event unless the power is relinquished.
(3) Power exercisable only by will
A power exercisable only by will, other than a power in the
grantor to appoint by will the income of the trust where the
income is accumulated for such disposition by the grantor or may
be so accumulated in the discretion of the grantor or a
nonadverse party, or both, without the approval or consent of any
adverse party.
(4) Power to allocate among charitable beneficiaries
A power to determine the beneficial enjoyment of the corpus or
the income therefrom if the corpus or income is irrevocably
payable for a purpose specified in section 170(c) (relating to
definition of charitable contributions) or to an employee stock
ownership plan (as defined in section 4975(e)(7)) in a qualified
gratuitous transfer (as defined in section 664(g)(1)).
(5) Power to distribute corpus
A power to distribute corpus either -
(A) to or for a beneficiary or beneficiaries or to or for a
class of beneficiaries (whether or not income beneficiaries)
provided that the power is limited by a reasonably definite
standard which is set forth in the trust instrument; or
(B) to or for any current income beneficiary, provided that
the distribution of corpus must be chargeable against the
proportionate share of corpus held in trust for the payment of
income to the beneficiary as if the corpus constituted a
separate trust.
A power does not fall within the powers described in this
paragraph if any person has a power to add to the beneficiary or
beneficiaries or to a class of beneficiaries designated to
receive the income or corpus, except where such action is to
provide for after-born or after-adopted children.
(6) Power to withhold income temporarily
A power to distribute or apply income to or for any current
income beneficiary or to accumulate the income for him, provided
that any accumulated income must ultimately be payable -
(A) to the beneficiary from whom distribution or application
is withheld, to his estate, or to his appointees (or persons
named as alternate takers in default of appointment) provided
that such beneficiary possesses a power of appointment which
does not exclude from the class of possible appointees any
person other than the beneficiary, his estate, his creditors,
or the creditors of his estate, or
(B) on termination of the trust, or in conjunction with a
distribution of corpus which is augmented by such accumulated
income, to the current income beneficiaries in shares which
have been irrevocably specified in the trust instrument.
Accumulated income shall be considered so payable although it is
provided that if any beneficiary does not survive a date of
distribution which could reasonably have been expected to occur
within the beneficiary's lifetime, the share of the deceased
beneficiary is to be paid to his appointees or to one or more
designated alternate takers (other than the grantor or the
grantor's estate) whose shares have been irrevocably specified. A
power does not fall within the powers described in this paragraph
if any person has a power to add to the beneficiary or
beneficiaries or to a class of beneficiaries designated to
receive the income or corpus except where such action is to
provide for after-born or after-adopted children.
(7) Power to withhold income during disability of a beneficiary
A power exercisable only during -
(A) the existence of a legal disability of any current income
beneficiary, or
(B) the period during which any income beneficiary shall be
under the age of 21 years,
to distribute or apply income to or for such beneficiary or to
accumulate and add the income to corpus. A power does not fall
within the powers described in this paragraph if any person has a
power to add to the beneficiary or beneficiaries or to a class of
beneficiaries designated to receive the income or corpus, except
where such action is to provide for after-born or after-adopted
children.
(8) Power to allocate between corpus and income
A power to allocate receipts and disbursements as between
corpus and income, even though expressed in broad language.
(c) Exception for certain powers of independent trustees
Subsection (a) shall not apply to a power solely exercisable
(without the approval or consent of any other person) by a trustee
or trustees, none of whom is the grantor, and no more than half of
whom are related or subordinate parties who are subservient to the
wishes of the grantor -
(1) to distribute, apportion, or accumulate income to or for a
beneficiary or beneficiaries, or to, for, or within a class of
beneficiaries; or
(2) to pay out corpus to or for a beneficiary or beneficiaries
or to or for a class of beneficiaries (whether or not income
beneficiaries).
A power does not fall within the powers described in this
subsection if any person has a power to add to the beneficiary or
beneficiaries or to a class of beneficiaries designated to receive
the income or corpus, except where such action is to provide for
after-born or after-adopted children. For periods during which an
individual is the spouse of the grantor (within the meaning of
section 672(e)(2)), any reference in this subsection to the grantor
shall be treated as including a reference to such individual.
(d) Power to allocate income if limited by a standard
Subsection (a) shall not apply to a power solely exercisable
(without the approval or consent of any other person) by a trustee
or trustees, none of whom is the grantor or spouse living with the
grantor, to distribute, apportion, or accumulate income to or for a
beneficiary or beneficiaries, or to, for, or within a class of
beneficiaries, whether or not the conditions of paragraph (6) or
(7) of subsection (b) are satisfied, if such power is limited by a
reasonably definite external standard which is set forth in the
trust instrument. A power does not fall within the powers described
in this subsection if any person has a power to add to the
beneficiary or beneficiaries or to a class of beneficiaries
designated to receive the income or corpus except where such action
is to provide for after-born or after-adopted children.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 227; Pub. L. 99-514, title XIV,
Sec. 1402(b)(1), Oct. 22, 1986, 100 Stat. 2712; Pub. L. 100-647,
title I, Sec. 1014(a)(3), Nov. 10, 1988, 102 Stat. 3559; Pub. L.
105-34, title XV, Sec. 1530(c)(6), Aug. 5, 1997, 111 Stat. 1078.)
-MISC1-
AMENDMENTS
1997 - Subsec. (b)(4). Pub. L. 105-34 inserted before period "or
to an employee stock ownership plan (as defined in section
4975(e)(7)) in a qualified gratuitous transfer (as defined in
section 664(g)(1))".
1988 - Subsec. (c). Pub. L. 100-647 inserted at end "For periods
during which an individual is the spouse of the grantor (within the
meaning of section 672(e)(2)), any reference in this subsection to
the grantor shall be treated as including a reference to such
individual."
1986 - Subsec. (b)(2). Pub. L. 99-514 substituted "occurrence of
event" for "expiration of 10-year period" in heading and in text
substituted "the occurrence of an event" for "the expiration of a
period" and "the occurrence of the event" for "the expiration of
the period".
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable to transfers made by
trusts to, or for the use of, an employee stock ownership plan
after Aug. 5, 1997, see section 1530(d) of Pub. L. 105-34, set out
as a note under section 401 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable with respect to transfers
in trust made after Mar. 1, 1986, except for transfers pursuant to
a certain binding property settlement agreement, see section
1402(c) of Pub. L. 99-514, set out as a note under section 673 of
this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 672, 677, 678 of this
title.
-End-
-CITE-
26 USC Sec. 675 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart E - Grantors and Others Treated as Substantial Owners
-HEAD-
Sec. 675. Administrative powers
-STATUTE-
The grantor shall be treated as the owner of any portion of a
trust in respect of which -
(1) Power to deal for less than adequate and full consideration
A power exercisable by the grantor or a nonadverse party, or
both, without the approval or consent of any adverse party
enables the grantor or any person to purchase, exchange, or
otherwise deal with or dispose of the corpus or the income
therefrom for less than an adequate consideration in money or
money's worth.
(2) Power to borrow without adequate interest or security
A power exercisable by the grantor or a nonadverse party, or
both, enables the grantor to borrow the corpus or income,
directly or indirectly, without adequate interest or without
adequate security except where a trustee (other than the grantor)
is authorized under a general lending power to make loans to any
person without regard to interest or security.
(3) Borrowing of the trust funds
The grantor has directly or indirectly borrowed the corpus or
income and has not completely repaid the loan, including any
interest, before the beginning of the taxable year. The preceding
sentence shall not apply to a loan which provides for adequate
interest and adequate security, if such loan is made by a trustee
other than the grantor and other than a related or subordinate
trustee subservient to the grantor. For periods during which an
individual is the spouse of the grantor (within the meaning of
section 672(e)(2)), any reference in this paragraph to the
grantor shall be treated as including a reference to such
individual.
(4) General powers of administration
A power of administration is exercisable in a nonfiduciary
capacity by any person without the approval or consent of any
person in a fiduciary capacity. For purposes of this paragraph,
the term "power of administration" means any one or more of the
following powers: (A) a power to vote or direct the voting of
stock or other securities of a corporation in which the holdings
of the grantor and the trust are significant from the viewpoint
of voting control; (B) a power to control the investment of the
trust funds either by directing investments or reinvestments, or
by vetoing proposed investments or reinvestments, to the extent
that the trust funds consist of stocks or securities of
corporations in which the holdings of the grantor and the trust
are significant from the viewpoint of voting control; or (C) a
power to reacquire the trust corpus by substituting other
property of an equivalent value.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 229; Pub. L. 100-647, title I,
Sec. 1014(a)(2), Nov. 10, 1988, 102 Stat. 3559.)
-MISC1-
AMENDMENTS
1988 - Par. (3). Pub. L. 100-647 inserted at end "For periods
during which an individual is the spouse of the grantor (within the
meaning of section 672(e)(2)), any reference in this paragraph to
the grantor shall be treated as including a reference to such
individual."
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 672, 678 of this title.
-End-
-CITE-
26 USC Sec. 676 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart E - Grantors and Others Treated as Substantial Owners
-HEAD-
Sec. 676. Power to revoke
-STATUTE-
(a) General rule
The grantor shall be treated as the owner of any portion of a
trust, whether or not he is treated as such owner under any other
provision of this part, where at any time the power to revest in
the grantor title to such portion is exercisable by the grantor or
a non-adverse party, or both.
(b) Power affecting beneficial enjoyment only after occurrence of
event
Subsection (a) shall not apply to a power the exercise of which
can only affect the beneficial enjoyment of the income for a period
commencing after the occurrence of an event such that a grantor
would not be treated as the owner under section 673 if the power
were a reversionary interest. But the grantor may be treated as the
owner after the occurrence of such event unless the power is
relinquished.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 230; Pub. L. 99-514, title XIV,
Sec. 1402(b)(2), Oct. 22, 1986, 100 Stat. 2712.)
-MISC1-
AMENDMENTS
1986 - Subsec. (b)(2). Pub. L. 99-514 substituted "occurrence of
event" for "expiration of 10-year period" in heading and in text
substituted "the occurrence of an event" for "the expiration of a
period" and "the occurrence of such event" for "the expiration of
such period".
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable with respect to transfers
in trust made after Mar. 1, 1986, except for transfers pursuant to
a certain binding property settlement agreement, see section
1402(c) of Pub. L. 99-514, set out as a note under section 673 of
this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 646, 678, 2035 of this
title.
-End-
-CITE-
26 USC Sec. 677 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart E - Grantors and Others Treated as Substantial Owners
-HEAD-
Sec. 677. Income for benefit of grantor
-STATUTE-
(a) General rule
The grantor shall be treated as the owner of any portion of a
trust, whether or not he is treated as such owner under section
674, whose income without the approval or consent of any adverse
party is, or, in the discretion of the grantor or a nonadverse
party, or both, may be -
(1) distributed to the grantor or the grantor's spouse;
(2) held or accumulated for future distribution to the grantor
or the grantor's spouse; or
(3) applied to the payment of premiums on policies of insurance
on the life of the grantor or the grantor's spouse (except
policies of insurance irrevocably payable for a purpose specified
in section 170(c) (relating to definition of charitable
contributions)).
This subsection shall not apply to a power the exercise of which
can only affect the beneficial enjoyment of the income for a period
commencing after the occurrence of an event such that the grantor
would not be treated as the owner under section 673 if the power
were a reversionary interest; but the grantor may be treated as the
owner after the occurrence of the event unless the power is
relinquished.
(b) Obligations of support
Income of a trust shall not be considered taxable to the grantor
under subsection (a) or any other provision of this chapter merely
because such income in the discretion of another person, the
trustee, or the grantor acting as trustee or co-trustee, may be
applied or distributed for the support or maintenance of a
beneficiary (other than the grantor's spouse) whom the grantor is
legally obligated to support or maintain, except to the extent that
such income is so applied or distributed. In cases where the
amounts so applied or distributed are paid out of corpus or out of
other than income for the taxable year, such amounts shall be
considered to be an amount paid or credited within the meaning of
paragraph (2) of section 661(a) and shall be taxed to the grantor
under section 662.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 230; Pub. L. 91-172, title III,
Sec. 332(a), Dec. 30, 1969, 83 Stat. 599; Pub. L. 99-514, title
XIV, Sec. 1402(b)(3), Oct. 22, 1986, 100 Stat. 2712.)
-MISC1-
AMENDMENTS
1986 - Subsec. (a). Pub. L. 99-514 substituted "the occurrence of
an event" for "the expiration of a period" and "the occurrence of
the event" for "the expiration of the period" in last sentence.
1969 - Subsec. (a)(1) to (3). Pub. L. 91-172, Sec. 332(a)(1),
inserted "or the grantor's spouse" after "the grantor" in pars.
(1), (2), and (3).
Subsec. (b). Pub. L. 91-172, Sec. 332(a)(2), inserted "(other
than the grantor's spouse)" after "beneficiary".
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable with respect to transfers
in trust made after Mar. 1, 1986, except for transfers pursuant to
a certain binding property settlement agreement, see section
1402(c) of Pub. L. 99-514, set out as a note under section 673 of
this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Section 332(b) of Pub. L. 91-172 provided that: "The amendments
made by subsection (a) [amending this section] shall apply in
respect of property transferred in trust after October 9, 1969."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 674, 678, 1246 of this
title.
-End-
-CITE-
26 USC Sec. 678 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart E - Grantors and Others Treated as Substantial Owners
-HEAD-
Sec. 678. Person other than grantor treated as substantial owner
-STATUTE-
(a) General rule
A person other than the grantor shall be treated as the owner of
any portion of a trust with respect to which:
(1) such person has a power exercisable solely by himself to
vest the corpus or the income therefrom in himself, or
(2) such person has previously partially released or otherwise
modified such a power and after the release or modification
retains such control as would, within the principles of sections
671 to 677, inclusive, subject to grantor of a trust to treatment
as the owner thereof.
(b) Exception where grantor is taxable
Subsection (a) shall not apply with respect to a power over
income, as originally granted or thereafter modified, if the
grantor of the trust or a transferor (to whom section 679 applies)
is otherwise treated as the owner under the provisions of this
subpart other than this section.
(c) Obligations of support
Subsection (a) shall not apply to a power which enables such
person, in the capacity of trustee or cotrustee, merely to apply
the income of the trust to the support or maintenance of a person
whom the holder of the power is obligated to support or maintain
except to the extent that such income is so applied. In cases where
the amounts so applied or distributed are paid out of corpus or out
of other than income of the taxable year, such amounts shall be
considered to be an amount paid or credited within the meaning of
paragraph (2) of section 661(a) and shall be taxed to the holder of
the power under section 662.
(d) Effect of renunciation or disclaimer
Subsection (a) shall not apply with respect to a power which has
been renounced or disclaimed within a reasonable time after the
holder of the power first became aware of its existence.
(e) Cross reference
For provision under which beneficiary of trust is treated as
owner of the portion of the trust which consists of stock in an
S corporation, see section 1361(d).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 231; Pub. L. 94-455, title X,
Sec. 1013(b), Oct. 4, 1976, 90 Stat. 1615; Pub. L. 97-448, title I,
Sec. 102(i)(2), Jan. 12, 1983, 96 Stat. 2373; Pub. L. 106-554, Sec.
1(a)(7) [title III, Sec. 319(8)(A)], Dec. 21, 2000, 114 Stat. 2763,
2763A-646.)
-MISC1-
AMENDMENTS
2000 - Subsec. (e). Pub. L. 106-554 substituted "an S
corporation" for "an electing small business corporation".
1983 - Subsec. (e). Pub. L. 97-448 added subsec. (e).
1976 - Subsec. (b). Pub. L. 94-455 substituted "if the grantor of
the trust or a transferor (to whom section 679 applies) is
otherwise treated as the owner under the provisions of this subpart
other than this section" for "if the grantor of the trust is
otherwise treated as the owner under sections 671 to 677,
inclusive".
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
For effective date of amendment by Pub. L. 94-455, see section
1013(f)(1) of Pub. L. 94-455, set out as an Effective Date note
under section 679 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in section 1361 of this title.
-End-
-CITE-
26 USC Sec. 679 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart E - Grantors and Others Treated as Substantial Owners
-HEAD-
Sec. 679. Foreign trusts having one or more United States
beneficiaries
-STATUTE-
(a) Transferor treated as owner
(1) In general
A United States person who directly or indirectly transfers
property to a foreign trust (other than a trust described in
section 6048(a)(3)(B)(ii)) shall be treated as the owner for his
taxable year of the portion of such trust attributable to such
property if for such year there is a United States beneficiary of
any portion of such trust.
(2) Exceptions
Paragraph (1) shall not apply -
(A) Transfers by reason of death
To any transfer by reason of the death of the transferor.
(B) Transfers at fair market value
To any transfer of property to a trust in exchange for
consideration of at least the fair market value of the
transferred property. For purposes of the preceding sentence,
consideration other than cash shall be taken into account at
its fair market value.
(3) Certain obligations not taken into account under fair market
value exception
(A) In general
In determining whether paragraph (2)(B) applies to any
transfer by a person described in clause (ii) or (iii) of
subparagraph (C), there shall not be taken into account -
(i) except as provided in regulations, any obligation of a
person described in subparagraph (C), and
(ii) to the extent provided in regulations, any obligation
which is guaranteed by a person described in subparagraph
(C).
(B) Treatment of principal payments on obligation
Principal payments by the trust on any obligation referred to
in subparagraph (A) shall be taken into account on and after
the date of the payment in determining the portion of the trust
attributable to the property transferred.
(C) Persons described
The persons described in this subparagraph are -
(i) the trust,
(ii) any grantor, owner, or beneficiary of the trust, and
(iii) any person who is related (within the meaning of
section 643(i)(2)(B)) to any grantor, owner, or beneficiary
of the trust.
(4) Special rules applicable to foreign grantor who later becomes
a United States person
(A) In general
If a nonresident alien individual has a residency starting
date within 5 years after directly or indirectly transferring
property to a foreign trust, this section and section 6048
shall be applied as if such individual transferred to such
trust on the residency starting date an amount equal to the
portion of such trust attributable to the property transferred
by such individual to such trust in such transfer.
(B) Treatment of undistributed income
For purposes of this section, undistributed net income for
periods before such individual's residency starting date shall
be taken into account in determining the portion of the trust
which is attributable to property transferred by such
individual to such trust but shall not otherwise be taken into
account.
(C) Residency starting date
For purposes of this paragraph, an individual's residency
starting date is the residency starting date determined under
section 7701(b)(2)(A).
(5) Outbound trust migrations
If -
(A) an individual who is a citizen or resident of the United
States transferred property to a trust which was not a foreign
trust, and
(B) such trust becomes a foreign trust while such individual
is alive,
then this section and section 6048 shall be applied as if such
individual transferred to such trust on the date such trust
becomes a foreign trust an amount equal to the portion of such
trust attributable to the property previously transferred by such
individual to such trust. A rule similar to the rule of paragraph
(4)(B) shall apply for purposes of this paragraph.
(b) Trusts acquiring United States beneficiaries
If -
(1) subsection (a) applies to a trust for the transferor's
taxable year, and
(2) subsection (a) would have applied to the trust for his
immediately preceding taxable year but for the fact that for such
preceding taxable year there was no United States beneficiary for
any portion of the trust,
then, for purposes of this subtitle, the transferor shall be
treated as having income for the taxable year (in addition to his
other income for such year) equal to the undistributed net income
(at the close of such immediately preceding taxable year)
attributable to the portion of the trust referred to in subsection
(a).
(c) Trusts treated as having a United States beneficiary
(1) In general
For purposes of this section, a trust shall be treated as
having a United States beneficiary for the taxable year unless -
(A) under the terms of the trust, no part of the income or
corpus of the trust may be paid or accumulated during the
taxable year to or for the benefit of a United States person,
and
(B) if the trust were terminated at any time during the
taxable year, no part of the income or corpus of such trust
could be paid to or for the benefit of a United States person.
(2) Attribution of ownership
For purposes of paragraph (1), an amount shall be treated as
paid or accumulated to or for the benefit of a United States
person if such amount is paid to or accumulated for a foreign
corporation, foreign partnership, or foreign trust or estate, and
-
(A) in the case of a foreign corporation, such corporation is
a controlled foreign corporation (as defined in section
957(a)),
(B) in the case of a foreign partnership, a United States
person is a partner of such partnership, or
(C) in the case of a foreign trust or estate, such trust or
estate has a United States beneficiary (within the meaning of
paragraph (1)).
(3) Certain United States beneficiaries disregarded
A beneficiary shall not be treated as a United States person in
applying this section with respect to any transfer of property to
foreign trust if such beneficiary first became a United States
person more than 5 years after the date of such transfer.
(d) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this section.
-SOURCE-
(Added Pub. L. 94-455, title X, Sec. 1013(a), Oct. 4, 1976, 90
Stat. 1614; amended Pub. L. 96-603, Sec. 2(b), Dec. 28, 1980, 94
Stat. 3509; Pub. L. 104-188, title I, Sec. 1903(a)-(f), Aug. 20,
1996, 110 Stat. 1909, 1910; Pub. L. 105-34, title XVI, Sec.
1601(i)(2), Aug. 5, 1997, 111 Stat. 1093; Pub. L. 105-206, title
VI, Sec. 6018(g), July 22, 1998, 112 Stat. 823.)
-MISC1-
AMENDMENTS
1998 - Subsec. (a)(1). Pub. L. 105-206 provided that the
amendment made by section 1903(b) of Pub. L. 104-188 shall be
applied as if "or" in the material proposed to be stricken were
capitalized. See 1996 Amendment note below.
1997 - Subsec. (a)(3)(C)(ii), (iii). Pub. L. 105-34 inserted ",
owner," after "grantor".
1996 - Subsec. (a)(1). Pub. L. 104-188, Sec. 1903(b), which
directed that subsec. (a) of this section be amended by
substituting "section 6048(a)(3)(B)(ii)" for "section 404(a)(4) or
404A", was executed to par. (1) by making the substitution for
"section 404(a)(4) Or section 404A" to reflect the probable intent
of Congress. See 1998 Amendment note above.
Subsec. (a)(2)(B). Pub. L. 104-188, Sec. 1903(a)(1), amended
subpar. (B) generally. Prior to amendment, subpar. (B) read as
follows: "Transfers where gain is recognized to transferor. - To
any sale or exchange of the property at its fair market value in a
transaction in which all of the gain to the transferor is realized
at the time of the transfer and is recognized either at such time
or is returned as provided in section 453."
Subsec. (a)(3). Pub. L. 104-188, Sec. 1903(a)(2), added par. (3).
Subsec. (a)(4), (5). Pub. L. 104-188, Sec. 1903(c), added pars.
(4) and (5).
Subsec. (c)(2)(A). Pub. L. 104-188, Sec. 1903(e), amended subpar.
(A) generally. Prior to amendment, subpar. (A) read as follows: "in
the case of a foreign corporation, more than 50 percent of the
total combined voting power of all classes of stock entitled to
vote of such corporation is owned (within the meaning of section
958(a)) or is considered to be owned (within the meaning of section
958(b)) by United States shareholders (as defined in section
951(b)),".
Subsec. (c)(3). Pub. L. 104-188, Sec. 1903(d), added par. (3).
Subsec. (d). Pub. L. 104-188, Sec. 1903(f), added subsec. (d).
1980 - Subsec. (a)(1). Pub. L. 96-603 inserted "Or section 404A"
after "section 404(a)(4)".
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by section 6018 of Pub. L. 105-206 effective as if
included in the provisions of the Small Business Job Protection Act
of 1996, Pub. L. 104-188, to which such amendment relates, see
section 6018(h) of Pub. L. 105-206, set out as a note under section
23 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 effective as if included in the
provisions of the Small Business Job Protection Act of 1996, Pub.
L. 104-188, to which it relates, see section 1601(j) of Pub. L.
105-34, set out as a note under section 23 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1903(g) of Pub. L. 104-188 provided that: "The amendments
made by this section [amending this section] shall apply to
transfers of property after February 6, 1995."
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-603 applicable with respect to employer
contributions or accruals for taxable years beginning after Dec.
31, 1979, election to apply amendments retroactively with respect
to foreign subsidiaries, allowance or prior deductions in case of
certain funded branch plans, and time and manner for making
elections, see section 2(e) of Pub. L. 96-603, set out as an
Effective Date note under section 404A of this title.
EFFECTIVE DATE
Section 1013(f)(1) of Pub. L. 94-455 provided that: "The
amendments made by this section (other than subsection (c))
[enacting this section and amending sections 643, 678, 6048, and
6678 of this title] shall apply to taxable years ending after
December 31, 1975, but only in the case of -
"(A) foreign trusts created after May 21, 1974, and
"(B) transfers of property to foreign trusts after May 21,
1974."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 678, 6048 of this title.
-End-
-CITE-
26 USC Subpart F - Miscellaneous 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart F - Miscellaneous
-HEAD-
SUBPART F - MISCELLANEOUS
-MISC1-
Sec.
681. Limitation on charitable deduction.
682. Income of an estate or trust in case of divorce, etc.
683. Use of trust as an exchange fund.
684. Recognition of gain on certain transfers to certain
foreign trusts and estates.
685. Treatment of funeral trusts.
-STATAMEND-
AMENDMENT OF ANALYSIS
Pub. L. 107-16, title V, Sec. 542(e)(1)(D), (f)(2), title IX,
Sec. 901, June 7, 2001, 115 Stat. 85, 86, 150, provided that,
applicable to transfers after Dec. 31, 2009, item 684 is
temporarily amended by inserting "and nonresident aliens" after
"estates".
-MISC2-
AMENDMENTS
1997 - Pub. L. 105-34, title XI, Sec. 1131(c)(6), title XIII,
Sec. 1309(b), Aug. 5, 1997, 111 Stat. 980, 1043, added items 684
and 685.
1976 - Pub. L. 94-455, title XXI, Sec. 2131(e)(2), Oct. 4, 1976,
90 Stat. 1924, substituted "Use of trust as an exchange fund" for
"Applicability of provisions" in item 683.
-End-
-CITE-
26 USC Sec. 681 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart F - Miscellaneous
-HEAD-
Sec. 681. Limitation on charitable deduction
-STATUTE-
(a) Trade or business income
In computing the deduction allowable under section 642(c) to a
trust, no amount otherwise allowable under section 642(c) as a
deduction shall be allowed as a deduction with respect to income of
the taxable year which is allocable to its unrelated business
income for such year. For purposes of the preceding sentence, the
term "unrelated business income" means an amount equal to the
amount which, if such trust were exempt from tax under section
501(a) by reason of section 501(c)(3), would be computed as its
unrelated business taxable income under section 512 (relating to
income derived from certain business activities and from certain
property acquired with borrowed funds).
(b) Cross reference
For disallowance of certain charitable, etc., deductions
otherwise allowable under section 642(c), see sections 508(d)
and 4948(c)(4).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 232; Pub. L. 90-630, Sec. 6(b),
Oct. 22, 1968, 82 Stat. 1330; Pub. L. 91-172, title I, Secs.
101(j)(18), (19), 121(d)(2)(B), Dec. 30, 1969, 83 Stat. 528, 547.)
-MISC1-
AMENDMENTS
1969 - Subsec. (a). Pub. L. 91-172, Sec. 121(d)(2)(B),
substituted reference to certain property acquired with borrowed
funds for reference to certain leases.
Subsec. (b). Pub. L. 91-172, Sec. 101(j)(18), (19), redesignated
subsec. (d) as (b) and substituted "sections 518(d) and 4948(c)(4)"
for "section 503(e)". Former subsec. (b), dealing generally with
the operation of trusts, was struck out.
Subsec. (c). Pub. L. 91-172, Sec. 101(j)(18), struck out subsec.
(c) dealing with accumulated income.
Subsec. (d). Pub. L. 91-172, Sec. 101(j)(19), redesignated
subsec. (d) as (b).
1968 - Subsec. (c). Pub. L. 90-630 inserted provision that par.
(1) does not apply to income attributable to property transferred
to a trust before January 1, 1951, by the creator thereof if the
trust was irrevocable on such date and if the income is required to
be accumulated pursuant to the mandatory terms of the instrument
creating the trust.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by section 101(j)(18), (19) of Pub. L. 91-172 effective
Jan. 1, 1970, see section 101(k)(1) of Pub. L. 91-172, set out as
an Effective Date note under section 4940 of this title.
Amendment by section 121(d)(2)(B) of Pub. L. 91-172 applicable to
taxable years beginning after Dec. 31, 1969, see section 121(g) of
Pub. L. 91-172, set out as a note under section 511 of this title.
EFFECTIVE DATE OF 1968 AMENDMENT
Section 6(c) of Pub. L. 90-630 provided that: "The amendments
made by subsection (a) [amending section 504 of this title] and (b)
[amending this section] shall apply with respect to taxable years
beginning after December 31, 1953, and ending after August 16,
1954. For purposes of sections 3814 and 162(g)(4) of the Internal
Revenue Code of 1939, provisions having the same effect as such
amendments shall be treated as included in such sections effective
with respect to taxable years beginning after December 31, 1950."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 513, 642, 663 of this
title.
-End-
-CITE-
26 USC Sec. 682 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart F - Miscellaneous
-HEAD-
Sec. 682. Income of an estate or trust in case of divorce, etc.
-STATUTE-
(a) Inclusion in gross income of wife
There shall be included in the gross income of a wife who is
divorced or legally separated under a decree of divorce or of
separate maintenance (or who is separated from her husband under a
written separation agreement) the amount of the income of any trust
which such wife is entitled to receive and which, except for this
section, would be includible in the gross income of her husband,
and such amount shall not, despite any other provision of this
subtitle, be includible in the gross income of such husband. This
subsection shall not apply to that part of any such income of the
trust which the terms of the decree, written separation agreement,
or trust instrument fix, in terms of an amount of money or a
portion of such income, as a sum which is payable for the support
of minor children of such husband. In case such income is less than
the amount specified in the decree, agreement, or instrument, for
the purpose of applying the preceding sentence, such income, to the
extent of such sum payable for such support, shall be considered a
payment for such support.
(b) Wife considered a beneficiary
For purposes of computing the taxable income of the estate or
trust and the taxable income of a wife to whom subsection (a)
applies, such wife shall be considered as the beneficiary specified
in this part.
(c) Cross reference
For definitions of "husband" and "wife", as used in this
section, see section 7701(a)(17).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 234; Pub. L. 98-369, div. A,
title IV, Sec. 422(d)(2), July 18, 1984, 98 Stat. 798.)
-MISC1-
AMENDMENTS
1984 - Subsec. (b). Pub. L. 98-369 struck out "or section 71"
after "subsection (a)" and struck out provision that a periodic
payment under section 71 to any portion of which this part applied
shall be included in the gross income of the beneficiary in the
taxable year in which under this part such portion is required to
be included.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 applicable with respect to divorce or
separation instruments executed after Dec. 31, 1984, or executed
before Jan. 1, 1985, but modified on or after Jan. 1, 1985, with
express provision for application of amendment to modification, see
section 422(e)(1), (2) of Pub. L. 98-369, set out as a note under
section 71 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 71, 152, 215, 7701 of
this title.
-End-
-CITE-
26 USC Sec. 683 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart F - Miscellaneous
-HEAD-
Sec. 683. Use of trust as an exchange fund
-STATUTE-
(a) General rule
Except as provided in subsection (b), if property is transferred
to a trust in exchange for an interest in other trust property and
if the trust would be an investment company (within the meaning of
section 351) if it were a corporation, then gain shall be
recognized to the transferor.
(b) Exception for pooled income funds
Subsection (a) shall not apply to any transfer to a pooled income
fund (within the meaning of section 642(c)(5)).
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 235; Pub. L. 94-455, title XXI,
Sec. 2131(e)(1), Oct. 4, 1976, 90 Stat. 1924.)
-MISC1-
AMENDMENTS
1976 - Pub. L. 94-455 substituted provisions relating to use of
trust as an exchange fund for provisions setting forth rule that
this part applies only to taxable years beginning after Dec. 31,
1953, and ending after the date of the enactment of this title and
exceptions thereto.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment of section by Pub. L. 94-455 effective on Apr. 8, 1976,
in taxable years ending on or after such date, see section
2131(f)(6) of Pub. L. 94-455, set out as a note under section 584
of this title.
-End-
-CITE-
26 USC Sec. 684 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart F - Miscellaneous
-HEAD-
Sec. 684. Recognition of gain on certain transfers to certain
foreign trusts and estates
-STATUTE-
(a) In general
Except as provided in regulations, in the case of any transfer of
property by a United States person to a foreign estate or trust,
for purposes of this subtitle, such transfer shall be treated as a
sale or exchange for an amount equal to the fair market value of
the property transferred, and the transferor shall recognize as
gain the excess of -
(1) the fair market value of the property so transferred, over
(2) the adjusted basis (for purposes of determining gain) of
such property in the hands of the transferor.
(b) Exception
Subsection (a) shall not apply to a transfer to a trust by a
United States person to the extent that any person is treated as
the owner of such trust under section 671.
(c) Treatment of trusts which become foreign trusts
If a trust which is not a foreign trust becomes a foreign trust,
such trust shall be treated for purposes of this section as having
transferred, immediately before becoming a foreign trust, all of
its assets to a foreign trust.
-SOURCE-
(Added Pub. L. 105-34, title XI, Sec. 1131(b), Aug. 5, 1997, 111
Stat. 978; amended Pub. L. 107-16, title V, Sec. 542(e)(1)(A)-(C),
June 7, 2001, 115 Stat. 84, 85.)
-STATAMEND-
AMENDMENT OF SECTION
Pub. L. 107-16, title V, Sec. 542(e)(1)(A)-(C), (f)(2), title IX,
Sec. 901, June 7, 2001, 115 Stat. 84-86, 150, provided that,
applicable to transfers after Dec. 31, 2009, this section is
temporarily amended as follows:
(1) in section catchline, by inserting "and nonresident aliens"
after "estates";
(2) in subsection (a), by inserting "or to a nonresident alien"
after "or trust" in introductory provisions; and
(3) by amending subsection (b) to read as follows:
(b) Exceptions
(1) Transfers to certain trusts
Subsection (a) shall not apply to a transfer to a trust by a
United States person to the extent that any United States person
is treated as the owner of such trust under section 671.
(2) Lifetime transfers to nonresident aliens
Subsection (a) shall not apply to a lifetime transfer to a
nonresident alien.
See Effective and Termination Dates of 2001 Amendment note below.
-COD-
CODIFICATION
Another section 1131(b) of Pub. L. 105-34 amended sections 367,
721, and 1035 of this title.
-MISC1-
EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT
Amendment by Pub. L. 107-16 applicable to transfers after Dec.
31, 2009, see section 542(f)(2) of Pub. L. 107-16, set out as a
note under section 121 of this title.
Amendment by Pub. L. 107-16 inapplicable to estates of decedents
dying, gifts made, or generation skipping transfers, after Dec. 31,
2010, and the Internal Revenue Code of 1986 to be applied and
administered to such estates, gifts, and transfers as if such
amendment had never been enacted, see section 901 of Pub. L.
107-16, set out as a note under section 1 of this title.
-End-
-CITE-
26 USC Sec. 685 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART I - ESTATES, TRUSTS, AND BENEFICIARIES
Subpart F - Miscellaneous
-HEAD-
Sec. 685. Treatment of funeral trusts
-STATUTE-
(a) In general
In the case of a qualified funeral trust -
(1) subparts B, C, D, and E shall not apply, and
(2) no deduction shall be allowed by section 642(b).
(b) Qualified funeral trust
For purposes of this subsection, the term "qualified funeral
trust" means any trust (other than a foreign trust) if -
(1) the trust arises as a result of a contract with a person
engaged in the trade or business of providing funeral or burial
services or property necessary to provide such services,
(2) the sole purpose of the trust is to hold, invest, and
reinvest funds in the trust and to use such funds solely to make
payments for such services or property for the benefit of the
beneficiaries of the trust,
(3) the only beneficiaries of such trust are individuals with
respect to whom such services or property are to be provided at
their death under contracts described in paragraph (1),
(4) the only contributions to the trust are contributions by or
for the benefit of such beneficiaries,
(5) the trustee elects the application of this subsection, and
(6) the trust would (but for the election described in
paragraph (5)) be treated as owned under subpart E by the
purchasers of the contracts described in paragraph (1).
A trust shall not fail to be treated as meeting the requirement of
paragraph (6) by reason of the death of an individual but only
during the 60-day period beginning on the date of such death.
(c) Dollar limitation on contributions
(1) In general
The term "qualified funeral trust" shall not include any trust
which accepts aggregate contributions by or for the benefit of an
individual in excess of $7,000.
(2) Related trusts
For purposes of paragraph (1), all trusts having trustees which
are related persons shall be treated as 1 trust. For purposes of
the preceding sentence, persons are related if -
(A) the relationship between such persons is described in
section 267 or 707(b),
(B) such persons are treated as a single employer under
subsection (a) or (b) of section 52, or
(C) the Secretary determines that treating such persons as
related is necessary to prevent avoidance of the purposes of
this section.
(3) Inflation adjustment
In the case of any contract referred to in subsection (b)(1)
which is entered into during any calendar year after 1998, the
dollar amount referred to paragraph (1) shall be increased by an
amount equal to -
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section
1(f)(3) for such calendar year, by substituting "calendar year
1997" for "calendar year 1992" in subparagraph (B) thereof.
If any dollar amount after being increased under the preceding
sentence is not a multiple of $100, such dollar amount shall be
rounded to the nearest multiple of $100.
(d) Application of rate schedule
Section 1(e) shall be applied to each qualified funeral trust by
treating each beneficiary's interest in each such trust as a
separate trust.
(e) Treatment of amounts refunded to purchaser on cancellation
No gain or loss shall be recognized to a purchaser of a contract
described in subsection (b)(1) by reason of any payment from such
trust to such purchaser by reason of cancellation of such contract.
If any payment referred to in the preceding sentence consists of
property other than money, the basis of such property in the hands
of such purchaser shall be the same as the trust's basis in such
property immediately before the payment.
(f) Simplified reporting
The Secretary may prescribe rules for simplified reporting of all
trusts having a single trustee and of trusts terminated during the
year.
-SOURCE-
(Added Pub. L. 105-34, title XIII, Sec. 1309(a), Aug. 5, 1997, 111
Stat. 1042; amended Pub. L. 105-206, title VI, Sec. 6013(b), July
22, 1998, 112 Stat. 820.)
-STATAMEND-
LIMITATION ON CONTRIBUTIONS RECEIVED BY TRUST DURING CALENDAR YEAR
2004
For limitation on aggregate contributions received by qualified
funeral trust by or for the benefit of an individual for contracts
entered into during calendar year 2004, see section 3.23 of Revenue
Procedure 2003-85, set out as a note under section 1 of this title.
-MISC1-
AMENDMENTS
1998 - Subsec. (b). Pub. L. 105-206, Sec. 6013(b)(1), inserted
concluding provisions.
Subsec. (f). Pub. L. 105-206, Sec. 6013(b)(2), inserted "and of
trusts terminated during the year" before period at end.
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by Pub. L. 105-206 effective, except as otherwise
provided, as if included in the provisions of the Taxpayer Relief
Act of 1997, Pub. L. 105-34, to which such amendment relates, see
section 6024 of Pub. L. 105-206, set out as a note under section 1
of this title.
EFFECTIVE DATE
Section 1309(c) of Pub. L. 105-34 provided that: "The amendments
made by this section [enacting this section] shall apply to taxable
years ending after the date of the enactment of this Act [Aug. 5,
1997]."
-End-
-CITE-
26 USC PART II - INCOME IN RESPECT OF DECEDENTS 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART II - INCOME IN RESPECT OF DECEDENTS
-HEAD-
PART II - INCOME IN RESPECT OF DECEDENTS
-MISC1-
Sec.
691. Recipients of income in respect of decedents.
692. Income taxes of members of Armed Forces, astronauts,
and victims of certain terrorist attacks on death.
AMENDMENTS
2003 - Pub. L. 108-121, title I, Sec. 110(a)(3)(B), Nov. 11,
2003, 117 Stat. 1342, inserted ", astronauts," after "Forces" in
item 692.
2002 - Pub. L. 107-134, title I, Sec. 101(c)(2), Jan. 23, 2002,
115 Stat. 2429, substituted "Income taxes of members of Armed
Forces and victims of certain terrorist attacks on death" for
"Income taxes of members of Armed Forces on death" in item 692.
-End-
-CITE-
26 USC Sec. 691 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART II - INCOME IN RESPECT OF DECEDENTS
-HEAD-
Sec. 691. Recipients of income in respect of decedents
-STATUTE-
(a) Inclusion in gross income
(1) General rule
The amount of all items of gross income in respect of a
decedent which are not properly includible in respect of the
taxable period in which falls the date of his death or a prior
period (including the amount of all items of gross income in
respect of a prior decedent, if the right to receive such amount
was acquired by reason of the death of the prior decedent or by
bequest, devise, or inheritance from the prior decedent) shall be
included in the gross income, for the taxable year when received,
of:
(A) the estate of the decedent, if the right to receive the
amount is acquired by the decedent's estate from the decedent;
(B) the person who, by reason of the death of the decedent,
acquires the right to receive the amount, if the right to
receive the amount is not acquired by the decedent's estate
from the decedent; or
(C) the person who acquires from the decedent the right to
receive the amount by bequest, devise, or inheritance, if the
amount is received after a distribution by the decedent's
estate of such right.
(2) Income in case of sale, etc.
If a right, described in paragraph (1), to receive an amount is
transferred by the estate of the decedent or a person who
received such right by reason of the death of the decedent or by
bequest, devise, or inheritance from the decedent, there shall be
included in the gross income of the estate or such person, as the
case may be, for the taxable period in which the transfer occurs,
the fair market value of such right at the time of such transfer
plus the amount by which any consideration for the transfer
exceeds such fair market value. For purposes of this paragraph,
the term "transfer" includes sale, exchange, or other
disposition, or the satisfaction of an installment obligation at
other than face value, but does not include transmission at death
to the estate of the decedent or a transfer to a person pursuant
to the right of such person to receive such amount by reason of
the death of the decedent or by bequest, devise, or inheritance
from the decedent.
(3) Character of income determined by reference to decedent
The right, described in paragraph (1), to receive an amount
shall be treated, in the hands of the estate of the decedent or
any person who acquired such right by reason of the death of the
decedent, or by bequest, devise, or inheritance from the
decedent, as if it had been acquired by the estate or such person
in the transaction in which the right to receive the income was
originally derived and the amount includible in gross income
under paragraph (1) or (2) shall be considered in the hands of
the estate or such person to have the character which it would
have had in the hands of the decedent if the decedent had lived
and received such amount.
(4) Installment obligations acquired from decedent
In the case of an installment obligation reportable by the
decedent on the installment method under section 453, if such
obligation is acquired by the decedent's estate from the decedent
or by any person by reason of the death of the decedent or by
bequest, devise, or inheritance from the decedent -
(A) an amount equal to the excess of the face amount of such
obligation over the basis of the obligation in the hands of the
decedent (determined under section 453B) shall, for the purpose
of paragraph (1), be considered as an item of gross income in
respect of the decedent; and
(B) such obligation shall, for purposes of paragraphs (2) and
(3), be considered a right to receive an item of gross income
in respect of the decedent, but the amount includible in gross
income under paragraph (2) shall be reduced by an amount equal
to the basis of the obligation in the hands of the decedent
(determined under section 453B).
(5) Other rules relating to installment obligations
(A) In general
In the case of an installment obligation reportable by the
decedent on the installment method under section 453, for
purposes of paragraph (2) -
(i) the second sentence of paragraph (2) shall be applied
by inserting "(other than the obligor)" after "or a transfer
to a person",
(ii) any cancellation of such an obligation shall be
treated as a transfer, and
(iii) any cancellation of such an obligation occurring at
the death of the decedent shall be treated as a transfer by
the estate of the decedent (or, if held by a person other
than the decedent before the death of the decedent, by such
person).
(B) Face amount treated as fair market value in certain cases
In any case to which the first sentence of paragraph (2)
applies by reason of subparagraph (A), if the decedent and the
obligor were related persons (within the meaning of section
453(f)(1)), the fair market value of the installment obligation
shall be treated as not less than its face amount.
(C) Cancellation includes becoming unenforceable
For purposes of subparagraph (A), an installment obligation
which becomes unenforceable shall be treated as if it were
canceled.
(b) Allowance of deductions and credit
The amount of any deduction specified in section 162, 163, 164,
212, or 611 (relating to deductions for expenses, interest, taxes,
and depletion) or credit specified in section 27 (relating to
foreign tax credit), in respect of a decedent which is not properly
allowable to the decedent in respect of the taxable period in which
falls the date of his death, or a prior period, shall be allowed:
(1) Expenses, interest, and taxes
In the case of a deduction specified in sections 162, 163, 164,
or 212 and a credit specified in section 27, in the taxable year
when paid -
(A) to the estate of the decedent; except that
(B) if the estate of the decedent is not liable to discharge
the obligation to which the deduction or credit relates, to the
person who, by reason of the death of the decedent or by
bequest, devise, or inheritance acquires, subject to such
obligation, from the decedent an interest in property of the
decedent.
(2) Depletion
In the case of the deduction specified in section 611, to the
person described in subsection (a)(1)(A), (B), or (C) who, in the
manner described therein, receives the income to which the
deduction relates, in the taxable year when such income is
received.
(c) Deduction for estate tax
(1) Allowance of deduction
(A) General rule
A person who includes an amount in gross income under
subsection (a) shall be allowed, for the same taxable year, as
a deduction an amount which bears the same ratio to the estate
tax attributable to the net value for estate tax purposes of
all the items described in subsection (a)(1) as the value for
estate tax purposes of the items of gross income or portions
thereof in respect of which such person included the amount in
gross income (or the amount included in gross income, whichever
is lower) bears to the value for estate tax purposes of all the
items described in subsection (a)(1).
(B) Estates and trusts
In the case of an estate or trust, the amount allowed as a
deduction under subparagraph (A) shall be computed by excluding
from the gross income of the estate or trust the portion (if
any) of the items described in subsection (a)(1) which is
properly paid, credited, or to be distributed to the
beneficiaries during the taxable year.
(2) Method of computing deduction
For purposes of paragraph (1) -
(A) The term "estate tax" means the tax imposed on the estate
of the decedent or any prior decedent under section 2001 or
2101, reduced by the credits against such tax.
(B) The net value for estate tax purposes of all the items
described in subsection (a)(1) shall be the excess of the value
for estate tax purposes of all the items described in
subsection (a)(1) over the deductions from the gross estate in
respect of claims which represent the deductions and credit
described in subsection (b). Such net value shall be determined
with respect to the provisions of section 421(c)(2), relating
to the deduction for estate tax with respect to stock options
to which part II of subchapter D applies.
(C) The estate tax attributable to such net value shall be an
amount equal to the excess of the estate tax over the estate
tax computed without including in the gross estate such net
value.
(3) Special rule for generation-skipping transfers
In the case of any tax imposed by chapter 13 on a taxable
termination or a direct skip occurring as a result of the death
of the transferor, there shall be allowed a deduction (under
principles similar to the principles of this subsection) for the
portion of such tax attributable to items of gross income of the
trust which were not properly includible in the gross income of
the trust for periods before the date of such termination.
(4) Coordination with capital gain provisions
For purposes of sections 1(h), 1201, 1202, and 1211, the amount
of any gain taken into account with respect to any item described
in subsection (a)(1) shall be reduced (but not below zero) by the
amount of the deduction allowable under paragraph (1) of this
subsection with respect to such item.
(d) Amounts received by surviving annuitant under joint and
survivor annuity contract
(1) Deduction for estate tax
For purposes of computing the deduction under subsection
(c)(1)(A), amounts received by a surviving annuitant -
(A) as an annuity under a joint and survivor annuity contract
where the decedent annuitant died after December 31, 1953, and
after the annuity starting date (as defined in section
72(c)(4)), and
(B) during the surviving annuitant's life expectancy period,
shall, to the extent included in gross income under section 72,
be considered as amounts included in gross income under
subsection (a).
(2) Net value for estate tax purposes
In determining the net value for estate tax purposes under
subsection (c)(2)(B) for purposes of this subsection, the value
for estate tax purposes of the items described in paragraph (1)
of this subsection shall be computed -
(A) by determining the excess of the value of the annuity at
the date of the death of the deceased annuitant over the total
amount excludable from the gross income of the surviving
annuitant under section 72 during the surviving annuitant's
life expectancy period, and
(B) by multiplying the figure so obtained by the ratio which
the value of the annuity for estate tax purposes bears to the
value of the annuity at the date of the death of the deceased.
(3) Definitions
For purposes of this subsection -
(A) The term "life expectancy period" means the period
beginning with the first day of the first period for which an
amount is received by the surviving annuitant under the
contract and ending with the close of the taxable year with or
in which falls the termination of the life expectancy of the
surviving annuitant. For purposes of this subparagraph, the
life expectancy of the surviving annuitant shall be determined,
as of the date of the death of the deceased annuitant, with
reference to actuarial tables prescribed by the Secretary.
(B) The surviving annuitant's expected return under the
contract shall be computed, as of the death of the deceased
annuitant, with reference to actuarial tables prescribed by the
Secretary.
(e) Cross reference
For application of this section to income in respect of a
deceased partner, see section 753.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 235; Pub. L. 88-272, title II,
Sec. 221(c)(2), Feb. 26, 1964, 78 Stat. 75; Pub. L. 88-570, Sec. 1,
Sept. 2, 1964, 78 Stat. 854; Pub. L. 94-455, title XIX, Secs.
1901(a)(91), 1906(b)(13)(A), 1951(b)(10)(A), title XX, Secs.
2005(a)(4), 2006(b)(3), Oct. 4, 1976, 90 Stat. 1779, 1834, 1839,
1876, 1889; Pub. L. 95-600, title VII, Sec. 702(b)(1), Nov. 6,
1978, 92 Stat. 2925; Pub. L. 96-222, title I, Sec. 101(a)(8)(A),
Apr. 1, 1980, 94 Stat. 201; Pub. L. 96-223, title IV, Sec. 401(a),
Apr. 2, 1980, 94 Stat. 299; Pub. L. 96-471, Secs. 2(b)(5), 3, Oct.
19, 1980, 94 Stat. 2254; Pub. L. 97-34, title IV, Sec.
403(a)(2)(C), Aug. 13, 1981, 95 Stat. 301; Pub. L. 98-369, div. A,
title IV, Sec. 474(r)(18), July 18, 1984, 98 Stat. 843; Pub. L.
99-514, title III, Sec. 301(b)(8), title XIV, Sec. 1432(a)(3), Oct.
22, 1986, 100 Stat. 2217, 2729; Pub. L. 100-203, title X, Sec.
10202(c)(3), Dec. 22, 1987, 101 Stat. 1330-392; Pub. L. 100-647,
title I, Sec. 1011A(g)(10), Nov. 10, 1988, 102 Stat. 3482; Pub. L.
101-239, title VII, Sec. 7841(d)(3), Dec. 19, 1989, 103 Stat. 2428;
Pub. L. 101-508, title XI, Sec. 11101(d)(4), Nov. 5, 1990, 104
Stat. 1388-405; Pub. L. 102-318, title V, Sec. 521(b)(27), July 3,
1992, 106 Stat. 312; Pub. L. 103-66, title XIII, Sec. 13113(d)(4),
Aug. 10, 1993, 107 Stat. 430; Pub. L. 104-188, title I, Secs.
1401(b)(9), 1704(t)(73), Aug. 20, 1996, 110 Stat. 1789, 1891; Pub.
L. 105-34, title X, Sec. 1073(b)(1), Aug. 5, 1997, 111 Stat. 948.)
-MISC1-
AMENDMENTS
1997 - Subsec. (c)(1)(C). Pub. L. 105-34 struck out heading and
text of subpar. (C). Text read as follows: "For purposes of this
subsection, no deduction shall be allowed for the portion of the
estate tax attributable to the increase in such tax under section
4980A(d)."
1996 - Subsec. (c)(5). Pub. L. 104-188, Sec. 1704(t)(73),
provided that section 521(b)(27) of Pub. L. 102-318 shall be
applied as if "Section 691(c)(5)" appeared instead of "Section
691(c)". See 1992 Amendment note below.
Pub. L. 104-188, Sec. 1401(b)(9), struck out par. (5) which read
as follows:
"(5) Coordination with section 402(d). - For purposes of section
402(d) (other than paragraph (1)(C) thereof), the total taxable
amount of any lump sum distribution shall be reduced by the amount
of the deduction allowable under paragraph (1) of this subsection
which is attributable to the total taxable amount (determined
without regard to this paragraph)."
1993 - Subsec. (c)(4). Pub. L. 103-66 inserted "1202," after
"1201,".
1992 - Subsec. (c)(5). Pub. L. 102-318, which directed that
section 691(c) be amended "in the text and heading" by substituting
"402(d)" for "402(e)", was executed by making the substitution in
subsec. (c)(5). See 1996 Amendment note above.
1990 - Subsec. (c)(4). Pub. L. 101-508 substituted "1(h)" for
"1(j)".
1989 - Subsec. (c)(5). Pub. L. 101-239 substituted "paragraph
(1)(C)" for "paragraph (1)(D)".
1988 - Subsec. (c)(1)(C). Pub. L. 100-647 added subpar. (C).
1987 - Subsec. (a)(4), (5)(A). Pub. L. 100-203 struck out "or
453A" after "section 453".
1986 - Subsec. (c)(3). Pub. L. 99-514, Sec. 1432(a)(3), amended
par. (3) generally. Prior to amendment, par. (3) read as follows:
"For purposes of this section -
"(A) the tax imposed by section 2601 or any State inheritance
tax described in section 2602(c)(5)(B) on any generation-skipping
transfer shall be treated as a tax imposed by section 2001 on the
estate of the deemed transferor (as defined in section 2612(a));
"(B) any property transferred in such a transfer shall be
treated as if it were included in the gross estate of the deemed
transferor at the value of such property taken into account for
purposes of the tax imposed by section 2601; and
"(C) under regulations prescribed by the Secretary, any item of
gross income subject to the tax imposed under section 2601 shall
be treated as income described in subsection (a) if such item is
not properly includible in the gross income of the trust on or
before the date of the generation-skipping transfer (within the
meaning of section 2611(a)) and if such transfer occurs at or
after the death of the deemed transferor (as so defined)."
Subsec. (c)(4). Pub. L. 99-514, Sec. 301(b)(8), substituted
"capital gain provisions" for "capital gain deduction, etc." in
heading and in text substituted "1(j), 1201, and 1211" for "1201,
1202, and 1211, and for purposes of section 57(a)(9)".
1984 - Subsec. (b). Pub. L. 98-369 substituted "section 27" for
"section 33" in provisions preceding par. (1) and in provisions of
par. (1) preceding subpar. (A).
1981 - Subsec. (c)(3)(A). Pub. L. 97-34 substituted "section
2602(c)(5)(B)" for "section 2602(c)(5)(C)".
1980 - Subsec. (a)(4). Pub. L. 96-471, Sec. 2(b)(5), substituted
"reportable by the decedent on the installment method under section
453 or 453A" for "received by a decedent on the sale or other
disposition of property, the income from which was properly
reportable by the decedent on the installment basis under section
453" in text preceding subpar. (A) and "section 453B" for "section
453(d)" in subpars. (A) and (B).
Subsec. (a)(5). Pub. L. 96-471, Sec. 3, added par. (5).
Subsec. (c)(2)(A), (C). Pub. L. 96-223 repealed the amendments
made by Pub. L. 94-455, Sec. 2005(a)(4). See 1976 Amendment notes
below.
Subsec. (c)(5). Pub. L. 96-222 added par. (5).
1978 - Subsec. (c)(4). Pub. L. 95-600 added par. (4).
1976 - Subsec. (c)(1)(B). Pub. L. 94-455, Sec. 1901(a)(91),
struck out provision that this subparagraph applies to same taxable
years, and to same extent, as is provided in section 683 of this
title.
Subsec. (c)(2)(A). Pub. L. 94-455, Sec. 2005(a)(4)(A),
substituted "Federal and State estate taxes (within the meaning of
section 1023(f)(3))" for "the tax imposed on the estate of the
decedent or any prior decedent under section 2001 or 2101, reduced
by the credits against such tax". See Repeals note below.
Subsec. (c)(2)(C). Pub. L. 94-455, Sec. 2005(a)(4)(B),
substituted "which bears the same ratio to the estate tax as such
net value bears to the value of the gross estate" for "equal to the
excess of the estate tax over the estate tax computed without
including in the gross estate such net value". See Repeals note
below.
Subsec. (c)(3). Pub. L. 94-455, Sec. 2006(b)(3), added par. (3).
Subsec. (d)(3)(A), (B). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out "or his delegate" after "Secretary".
Subsecs. (e), (f). Pub. L. 94-455, Sec. 1951(b)(10)(A),
redesignated subsec. (f) as (e) and struck out former subsec. (e)
relating to certain installment obligations transmitted at death.
1964 - Subsec. (c)(2)(B). Pub. L. 88-272 substituted "421(c)(2),
relating to the deduction for estate tax with respect to stock
options to which part II of subchapter D applies" for
"421(d)(6)(B), relating to the deduction for estate tax with
respect to restricted stock options".
Subsecs. (e), (f). Pub. L. 88-570 added subsec. (e) and
redesignated former subsec. (e) as (f).
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable to estates of decedents
dying after Dec. 31, 1996, see section 1073(c) of Pub. L. 105-34,
set out as an Effective Date of Repeal note under section 4980A of
this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1401(b)(9) of Pub. L. 104-188 applicable to
taxable years beginning after Dec. 31, 1999, with retention of
certain transition rules, see section 1401(c) of Pub. L. 104-188,
set out as a note under section 402 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT
Amendment by Pub. L. 103-66 applicable to stock issued after Aug.
10, 1993, see section 13113(e) of Pub. L. 103-66, set out as a note
under section 53 of this title.
EFFECTIVE DATE OF 1992 AMENDMENT
Amendment by Pub. L. 102-318 applicable to distributions after
Dec. 31, 1992, see section 521(e) of Pub. L. 102-318, set out as a
note under section 402 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-508 applicable to taxable years
beginning after Dec. 31, 1990, see section 11101(e) of Pub. L.
101-508, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1987 AMENDMENT
Amendment by Pub. L. 100-203 applicable to dispositions in
taxable years beginning after Dec. 31, 1987, with special rules for
non-dealers and coordination with Tax Reform Act of 1986, see
section 10202(e)(1), (3), (5) of Pub. L. 100-203, set out as a note
under section 453 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 301(b)(8) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, see section 301(c) of
Pub. L. 99-514, set out as a note under section 62 of this title.
Amendment by section 1432(a)(3) of Pub. L. 99-514 applicable to
generation-skipping transfers (within the meaning of section 2611
of this title) made after Oct. 22, 1986, except as otherwise
provided, see section 1433 of Pub. L. 99-514, set out as an
Effective Date note under section 2601 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 applicable to taxable years beginning
after Dec. 31, 1983, and to carrybacks from such years, see section
475(a) of Pub. L. 98-369, set out as a note under section 21 of
this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by Pub. L. 97-34 applicable to estates of decedents
dying after Dec. 31, 1981, but inapplicable under certain
conditions under will executed before date which is 30 days after
Aug. 13, 1981, or under trust created by such date, see section
403(e) of Pub. L. 97-34, set out as a note under section 2056 of
this title.
EFFECTIVE DATE OF 1980 AMENDMENTS AND REVIVAL OF PRIOR LAW
For effective date of amendment by section 2(b)(5) of Pub. L.
96-471, see section 6(a)(1) of Pub. L. 96-471, set out as an
Effective Date note under section 453 of this title.
Section 6(b) of Pub. L. 96-471 provided: "The amendment made by
section 3 [amending this section] shall apply in the case of
decedents dying after the date of the enactment of this Act [Oct.
19, 1980]."
Amendment by Pub. L. 96-223 (repealing section 2005(a)(4) of Pub.
L. 94-455 and the amendments made thereby, which had amended this
section) applicable in respect of decedents dying after Dec. 31,
1976, and except for certain elections, this title to be applied
and administered as if those repealed provisions had not been
enacted, see section 401(b), (e) of Pub. L. 96-223, set out as a
note under section 1023 of this title.
Section 101(b)(1)(D) of Pub. L. 96-222 provided that: "The
amendment made by subsection (a)(7) [probably means subsection
(a)(8), which amended this section and section 2039 of this title]
shall apply with respect to the estates of decedents dying after
the date of the enactment of this Act [Apr. 1, 1980]."
EFFECTIVE DATE OF 1978 AMENDMENT
Section 702(b)(2) of Pub. L. 95-600 provided that: "The amendment
made by paragraph (1) [amending this section] shall apply with
respect to decedents dying after the date of the enactment of this
Act [Nov. 6, 1978]."
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(a)(91) of Pub. L. 94-455 effective for
taxable years beginning after Dec. 31, 1976, see section 1901(d) of
Pub. L. 94-455, set out as a note under section 2 of this title.
Amendment by section 1951(b)(10)(A) of Pub. L. 94-455 effective
for taxable years beginning after Dec. 31, 1976, see section
1951(d) of Pub. L. 94-455, set out as a note under section 72 of
this title.
Amendment by section 2005(a)(4)(A), (B) of Pub. L. 94-455
applicable in respect of decedents dying after Dec. 31, 1979, see
section 2005(f)(1) of Pub. L. 94-455, set out as a note under
section 1015 of this title.
For effective date of amendment by section 2006(b)(3) of Pub. L.
94-455, see section 2006(c) of Pub. L. 94-455, set out as an
Effective Date note under section 2601 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-272 applicable to taxable years ending
after Dec. 31, 1963, see section 221(e) of Pub. L. 88-272, set out
as a note under section 421 of this title.
REPEALS
Pub. L. 94-455, Sec. 2005(a)(4), cited as a credit to this
section, and the amendments made thereby, were repealed by Pub. L.
96-223, title IV, Sec. 401(a), 94 Stat. 299, resulting in the text
of this section reading as it read prior to enactment of section
2005(a)(4). See Effective Date of 1980 Amendments and Revival of
Prior Law note above.
SAVINGS PROVISION
Section 1951(b)(10)(B) of Pub. L. 94-455 provided that:
"Notwithstanding subparagraph (A) [amending this section], any
election made under section 691(e) to have subsection (a)(4) of
such section apply in the case of an installment obligation shall
continue to be effective with respect to taxable years beginning
after December 31, 1976. Section 691(c) shall not apply in respect
of any amount included in gross income by reason of the preceding
sentence. The liability under bond filed under section 44(d) of the
Internal Revenue Code of 1939 (or corresponding provisions of prior
law) in respect of which such an election applies is hereby
released with respect to taxable years to which such election
applies."
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1998
For provisions directing that if any amendments made by subtitle
D [Secs. 1401-1465] of title I of Pub. L. 104-188 require an
amendment to any plan or annuity contract, such amendment shall not
be required to be made before the first day of the first plan year
beginning on or after Jan. 1, 1998, see section 1465 of Pub. L.
104-188, set out as a note under section 401 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1994
For provisions directing that if any amendments made by subtitle
B [Secs. 521-523] of title V of Pub. L. 102-318 require an
amendment to any plan, such plan amendment shall not be required to
be made before the first plan year beginning on or after Jan. 1,
1994, see section 523 of Pub. L. 102-318, set out as a note under
section 401 of this title.
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 67, 220, 223, 224, 421,
453B, 753, 1014, 1022, 1038, 1245, 1250, 1367 of this title.
-End-
-CITE-
26 USC Sec. 692 01/19/04
-EXPCITE-
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter J - Estates, Trusts, Beneficiaries, and Decedents
PART II - INCOME IN RESPECT OF DECEDENTS
-HEAD-
Sec. 692. Income taxes of members of Armed Forces, astronauts, and
victims of certain terrorist attacks on death
-STATUTE-
(a) General rule
In the case of any individual who dies while in active service as
a member of the Armed Forces of the United States, if such death
occurred while serving in a combat zone (as determined under
section 112) or as a result of wounds, disease, or injury incurred
while so serving -
(1) any tax imposed by this subtitle shall not apply with
respect to the taxable year in which falls the date of his death,
or with respect to any prior taxable year ending on or after the
first day he so served in a combat zone after June 24, 1950; and
(2) any tax under this subtitle and under the corresponding
provisions of prior revenue laws for taxable years preceding
those specified in paragraph (1) which is unpaid at the date of
his death (including interest, additions to the tax, and
additional amounts) shall not be assessed, and if assessed the
assessment shall be abated, and if collected shall be credited or
refunded as an overpayment.
(b) Individuals in missing status
For purposes of this section, in the case of an individual who
was in a missing status within the meaning of section
6013(f)(3)(A), the date of his death shall be treated as being not
earlier than the date on which a determination of his death is made
under section 556 of title 37 of the United States Code. Except in
the case of the combat zone designated for purposes of the Vietnam
conflict, the preceding sentence shall not cause subsection (a)(1)
to apply for any taxable year beginning more than 2 years after the
date designated under section 112 as the date of termination of
combatant activities in a combat zone.
(c) Certain military or civilian employees of the United States
dying as a result of injuries
(1) In general
In the case of any individual who dies while a military or
civilian employee of the United States, if such death occurs as a
result of wounds or injury which was incurred while the
individual was a military or civilian employee of the United
States and which was incurred in a terroristic or military
action, any tax imposed by this subtitle shall not apply -
(A) with respect to the taxable year in which falls the date
of his death, and
(B) with respect to any prior taxable year in the period
beginning with the last taxable year ending before the taxable
year in which the wounds or injury were incurred.
(2) Terroristic or military action
For purposes of paragraph (1), the term "terroristic or
military action" means -
(A) any terroristic activity which a preponderance of the
evidence indicates was directed against the United States or
any of its allies, and
(B) any military action involving the Armed Forces of the
United States and resulting from violence or aggression against
the United States or any of its allies (or threat thereof).
For purposes of the preceding sentence, the term "military
action" does not include training exercises.
(3) Treatment of multinational forces
For purposes of paragraph (2), any multinational force in which
the United States is participating shall be treated as an ally of
the United States.
(d) Individuals dying as a result of certain attacks
(1) In general
In the case of a specified terrorist victim, any tax imposed by
this chapter shall not apply -
(A) with respect to the taxable year in which falls the date
of death, and
(B) with respect to any prior taxable year in the period
beginning with the last taxable year ending before the taxable
year in which the wounds, injury, or illness referred to in
paragraph (3) were incurred.
(2) $10,000 minimum benefit
If, but for this paragraph, the amount of tax not imposed by
paragraph (1) with respect to a specified terrorist victim is
less than $10,000, then such victim shall be treated as having
made a payment against the tax imposed by this chapter for such
victim's last taxable year in an amount equal to the excess of
$10,000 over the amount of tax not so imposed.
(3) Taxation of certain benefits
Subject to such rules as the Secretary may prescribe, paragraph
(1) shall not apply to the amount of any tax imposed by this
chapter which would be computed by only taking into account the
items of income, gain, or other amounts attributable to -
(A) deferred compensation which would have been payable after
death if the individual had died other than as a specified
terrorist victim, or
(B) amounts payable in the taxable year which would not have
been payable in such taxable year but for an action taken after
September 11, 2001.
(4) Specified terrorist victim
For purposes of this subsection, the term "specified terrorist
victim" means any decedent -
(A) who dies as a result of wounds or injury incurred as a
result of the terrorist attacks against the United States on
April 19, 1995, or September 11, 2001, or
(B) who dies as a result of illness incurred as a result of
an attack involving anthrax occurring on or after September 11,
2001, and before January 1, 2002.
Such term shall not include any individual identified by the
Attorney General to have been a participant or conspirator in any
such attack or a representative of such an individual.
(5) Relief with respect to astronauts
The provisions of this subsection shall apply to any astronaut
whose death occurs in the line of duty, except that paragraph
(3)(B) shall be applied by using the date of the death of the
astronaut rather than September 11, 2001.
-SOURCE-
(Aug. 16, 1954, ch. 736, 68A Stat. 238; Pub. L. 93-597, Sec. 4(a),
Jan. 2, 1975, 88 Stat. 1952; Pub. L. 94-455, title XIX, Sec.
1901(a)(92), Oct. 4, 1976, 90 Stat. 1780; Pub. L. 94-569, Sec.
3(c), Oct. 20, 1976, 90 Stat. 2699; Pub. L. 97-448, title III, Sec.
307(b), Jan. 12, 1983, 96 Stat. 2407; Pub. L. 98-259, Sec. 1(a),
Apr. 10, 1984, 98 Stat. 142; Pub. L. 98-369, div. A, title VII,
Sec. 722(g)(2), (3), July 18, 1984, 98 Stat. 974; Pub. L. 99-514,
title XVII, Sec. 1708(a)(2), Oct. 22, 1986, 100 Stat. 2782; Pub. L.
107-134, title I, Secs. 101(a), (c)(1), 113(b), Jan. 23, 2002, 115
Stat. 2428, 2435; Pub. L. 108-121, title I, Sec. 110(a)(1), (3)(A),
Nov. 11, 2003, 117 Stat. 1342.)
-MISC1-
AMENDMENTS
2003 - Pub. L. 108-121, Sec. 110(a)(3)(A), inserted ",
astronauts," after "Forces" in section catchline.
Subsec. (d)(5). Pub. L. 108-121, Sec. 110(a)(1), added par. (5).
2002 - Pub. L. 107-134, Sec. 101(c)(1), amended section catchline
generally. Prior to amendment, catchline read as follows: "Income
taxes on members of Armed Forces on death".
Subsec. (c). Pub. L. 107-134, Sec. 113(b)(2), struck out
"sustained overseas" after "injuries" in heading.
Subsec. (c)(1). Pub. L. 107-134, Sec. 113(b)(1), struck out
"outside the United States" before "in a terroristic or military
action" in introductory provisions.
Subsec. (d). Pub. L. 107-134, Sec. 101(a), added subsec. (d).
1986 - Subsec. (b). Pub. L. 99-514 amended last sentence
generally. Prior to amendment, sentence read as follows: "The
preceding sentence shall not cause subsection (a)(1) to apply for
any taxable year beginning -
"(1) after December 31, 1982, in the case of service in the
combat zone designated for purposes of the Vietnam conflict, or
"(2) more than 2 years after the date designated under section
112 as the date of termination of combatant activities in that
zone, in the case of any combat zone other than that referred to
in paragraph (1)."
1984 - Subsec. (c). Pub. L. 98-259 added subsec. (c).
Subsec. (c)(1). Pub. L. 98-369, Sec. 722(g)(2), which directed
amendment of par. (1) of this section by substituting "as a result
of wounds or injury which was incurred while the individual was a
military or civilian employee of the United States and which was
incurred" for "as a result of wounds or injury incurred" was
executed to par. (1) of subsec. (c) to reflect the probable intent
of Congress.
Subsec. (c)(2)(A). Pub. L. 98-369, Sec. 722(g)(3), inserted
"which a preponderance of the evidence indicates was".
1983 - Subsec. (b)(1). Pub. L. 97-448 substituted "December 31,
1982" for "January 2, 1978".
1976 - Subsec. (b). Pub. L. 94-569 substituted "to apply for any
taxable year beginning" for "to apply for any taxable year
beginning more than 2 years after" in provisions preceding par.
(1), substituted "after January 2, 1978" for "the date of enactment
of this subsection" in par. (1), and substituted "more than 2 years
after the date designated" for "the date designated" in par. (2).
Pub. L. 94-455 substituted "of members" for "on members" in
heading.
1975 - Subsec. (a). Pub. L. 93-597, Sec. 4(a)(1), (2), designated
existing provisions as subsec. (a), added heading, and in subsec.
(a) as so designated, struck out "during an induction period (as
defined in section 112(c)(5))", respectively.
Subsec. (b). Pub. L. 93-597, Sec. 4(a)(3), added subsec. (b).
EFFECTIVE DATE OF 2003 AMENDMENT
Amendment by Pub. L. 108-121 applicable with respect to any
astronaut whose death occurs after Dec. 31, 2002, see section
110(a)(4) of Pub. L. 108-121, set out as a note under section 5 of
this title.
EFFECTIVE DATE OF 2002 AMENDMENT
Pub. L. 107-134, title I, Sec. 101(d), Jan. 23, 2002, 115 Stat.
2429, provided that:
"(1) Effective date. - The amendments made by this section
[amending this section and sections 5 and 6013 of this title] shall
apply to taxable years ending before, on, or after September 11,
2001.
"(2) Waiver of limitations. - If refund or credit of any
overpayment of tax resulting from the amendments made by this
section is prevented at any time before the close of the 1-year
period beginning on the date of the enactment of this Act [Jan. 23,
2002] by the operation of any law or rule of law (including res
judicata), such refund or credit may nevertheless be made or
allowed if claim therefor is filed before the close of such
period."
Amendment by section 113(b) of Pub. L. 107-134 applicable to
taxable years ending on or after Sept. 11, 2001, see section 113(c)
of Pub. L. 107-134, set out as a note under section 104 of this
title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to taxable years beginning
after Dec. 31, 1982, see section 1708(b) of Pub. L. 99-514, set out
as a note under section 2 of this title.
EFFECTIVE DATE OF 1984 AMENDMENTS
Section 722(g)(5) of Pub. L. 98-369, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(A) In general. - The amendments made by this subsection
[amending this section and enacting and amending provisions set out
below] shall take effect as if they were included in the amendments
made by section 1 of Public Law 98-259 [amending this section and
enacting provisions set out below].
"(B) Statute of limitations waived. - Notwithstanding section
6511 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954],
the time for filing a claim for credit or refund of any overpayment
of tax resulting from the amendments made by this subsection shall
not expire before the date 1 year after the date of the enactment
of this Act [July 18, 1984]."
Section 1(b) of Pub. L. 98-259 as amended by Pub. L. 98-369, div.
A, title VII, Sec. 722(g)(1), July 18, 1984, 98 Stat. 974; Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(1) In general. - The amendment made by subsection (a) [amending
this section] shall apply with respect to all taxable years
(whether beginning before, on, or after the date of enactment of
this Act [Apr. 10, 1984]) of individuals dying after November 17,
1978, as a result of wounds or injuries incurred after such date.
"(2) Statute of limitations waived. - Notwithstanding section
6511 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954],
the time for filing a claim for credit or refund of any overpayment
of tax resulting from the amendment made by subsection (a) shall
not expire before the date 1 year after the date of the enactment
of this Act."
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 effective for taxable years beginning
after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out
as a note under section 2 of this title.
EFFECTIVE DATE OF 1975 AMENDMENT
Section 4(b) of Pub. L. 93-597 provided that: "The amendments
made by subsection (a) [amending this section] shall apply to
taxable years ending on or after February 28, 1961."
REFUNDS AND CREDITS OF OVERPAYMENTS FOR TAXABLE YEARS ENDING ON OR
AFTER FEBRUARY 28, 1961, RESULTING FROM APPLICATION OF PROVISIONS
Section 4(c) of Pub. L. 93-597, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "If the
refund or credit of any overpayment for any taxable year ending on
or after February 28, 1961, resulting from the application of
section 692 of the Internal Revenue Code of 1986 [formerly I.R.C.
1954] (as amended by subsection (a) of this section) is prevented
at any time before the expiration of one year after the date of the
enactment of this Act [Jan. 2, 1975] by the operation of any law or
rule of law, but would not have been so prevented if claim for
refund or credit therefor were made on the due date for the return
for the taxable year of his death (or any later year), refund or
credit of such overpayment may, nevertheless, be made or allowed if
claim therefor is filed before the expiration of such one-year
period."
TREATMENT OF DIRECTOR GENERAL OF MULTINATIONAL FORCE IN SINAI
Section 722(g)(4) of Pub. L. 98-369, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "For
purposes of section 692(c) of the Internal Revenue Code of 1986
[formerly I.R.C. 1954], the Director General of the Multinational
Force and Observers in the Sinai who died on February 15, 1984,
shall be treated as if he were a civilian employee of the United
States while he served as such Director General."
-SECREF-
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 5, 101, 104, 139, 2201,
6013, 7508A of this title; title 29 sections 1148, 1302.
-End-
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