26 U.S.C. § 661 — Deduction for estates and trusts accumulating income or distributing corpus
submitted 72 years ago by ch. 736 to r/title-26-INTERNAL-REVENUE-CODE · 291 words · no verdicts yet
This section allows an estate or trust to deduct certain amounts it must distribute or properly pays or credits. The deduction cannot exceed the estate’s or trust’s distributable net income, and special allocation and income limits apply.
(a) Deduction. For a taxable year*, an estate or trust may deduct, when computing its taxable income, the total of: (1) income that it must distribute currently, including an amount that may be paid from income or principal to the extent it is paid from that year’s income; and (2) other amounts properly paid or credited, or required to be distributed, for that year. The deduction cannot be greater than the estate’s or trust’s distributable net income*. (This does not apply to a trust covered by subpart B.)
(b) Character of amounts distributed. The amount determined under subsection (a) is treated as containing the same proportion of each class of items used to calculate distributable net income as each class bears to total distributable net income, unless the governing instrument specifically allocates different income classes. Deductions used to calculate distributable net income, including the deduction under section 642(c), must be allocated among the distributable-net-income items under regulations issued by the Secretary*.
(c) Limitation on deduction. No deduction is allowed under subsection (a) for any part of that amount that subsection (b) treats as an item of distributable net income that is not included in the estate’s or trust’s gross income.
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—
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
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.
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*.
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 credit: (Aug. 16, 1954, ch. 736, 68A Stat. 220; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–248, title III, §§ 302(b)(2), 308(a), Sept. 3, 1982, 96 Stat. 586, 591; Pub. L. 98–67, title I, § 102(a), Aug. 5, 1983, 97 Stat. 369.)
- 1954Enacted · Act of Aug. 16, 1954, ch. 736
- 1976Amended · Pub. L. 94-455 · 90 Stat. 1834
- 1982Amended · Pub. L. 97-248 · 96 Stat. 586, 591
- 1983Amended · Pub. L. 98-67 · 97 Stat. 369
A history note hasn’t been published yet. The record shows enactment by ch. 736 on 1954-08-16.
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