-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-
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