26 U.S.C. § 666 — Accumulation distribution allocated to preceding years
submitted 72 years ago by ch. 736 to r/title-26-INTERNAL-REVENUE-CODE · 631 words · no verdicts yet
For a trust subject to subpart C, an accumulation distribution is allocated to the trust's earliest preceding taxable years, up to the undistributed net income for those years. The section adds the related taxes to the deemed distributions, provides a fallback when records are missing, and denies refunds or credits based on these deemed distributions.
(a) Amount allocated. For a trust subject to subpart C, treat the trust's accumulation distribution* for a taxable year* as an amount described in section 661(a)(2) that was distributed on the last day of each earlier taxable year, starting with the earliest one. Do this only to the extent the amount is greater than the total undistributed net income for all still-earlier taxable years. The amount treated as distributed in any earlier year may not exceed that year's undistributed net income. For this subsection, compute each earlier year's undistributed net income without considering this accumulation distribution or any accumulation distribution determined for a later taxable year.
(b) Total taxes deemed distributed. If any part of an accumulation distribution is treated under subsection (a) as an amount described in section 661(a)(2) distributed on the last day of an earlier taxable year, and that part is at least the earlier year's undistributed net income, treat the trust as having distributed an additional amount described in section 661(a)(2) on the last day of that earlier year. The additional amount equals the taxes imposed on the trust* for that earlier year, other than the tax under section 55, that are attributable to the undistributed net income. Compute that undistributed net income and those taxes without considering this accumulation distribution or any accumulation distribution determined for a later taxable year.
(c) Pro rata portion of taxes deemed distributed. If any part of an accumulation distribution is treated under subsection (a) as an amount described in section 661(a)(2) distributed on the last day of an earlier taxable year, and that part is less than the earlier year's undistributed net income, treat the trust as having distributed an additional amount described in section 661(a)(2) on the last day of that earlier year. The additional amount equals the trust's taxes for that year, other than the tax under section 55, attributable to undistributed net income, multiplied by this ratio: the part of the accumulation distribution divided by the trust's undistributed net income for that year. Compute the undistributed net income and those taxes without considering this accumulation distribution or any accumulation distribution determined for a later taxable year.
(d) Rule when information is not available. If adequate records are unavailable to determine how this subpart properly applies to a trust distribution, treat the distribution as an accumulation distribution consisting of undistributed net income earned in the earliest preceding taxable year in which it can be established that the trust existed.
(e) Denial of refund to trusts and beneficiaries. A trust or its beneficiary* may not receive a refund or credit for an earlier taxable year because this section treats the trust as having made a distribution in that year.
In the case of a trust which is subject to subpart C, the amount of the accumulation distribution* of such trust for a taxable year* shall be deemed to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of each of the preceding taxable years, commencing with the earliest of such years, to the extent that such amount exceeds the total of any undistributed net income for all earlier preceding taxable years. The amount deemed to be distributed in any such preceding taxable year under the preceding sentence shall not exceed the undistributed net income for such preceding taxable year. For purposes of this subsection, undistributed net income for each of such preceding taxable years shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year.
If any portion of an accumulation distribution for any taxable year is deemed under subsection (a) to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of any preceding taxable year, and such portion of such distribution is not less than the undistributed net income for such preceding taxable year, the trust shall be deemed to have distributed on the last day of such preceding taxable year an additional amount within the meaning of paragraph (2) of section 661(a). Such additional amount shall be equal to the taxes (other than the tax imposed by section 55) imposed on the trust for such preceding taxable year attributable to the undistributed net income. For purposes of this subsection, the undistributed net income and the taxes imposed on the trust* for such preceding taxable year attributable to such undistributed net income shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year.
If any portion of an accumulation distribution for any taxable year is deemed under subsection (a) to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of any preceding taxable year and such portion of the accumulation distribution is less than the undistributed net income for such preceding taxable year, the trust shall be deemed to have distributed on the last day of such preceding taxable year an additional amount within the meaning of paragraph (2) of section 661(a). Such additional amount shall be equal to the taxes (other than the tax imposed by section 55) imposed on the trust for such taxable year attributable to the undistributed net income multiplied by the ratio of the portion of the accumulation distribution to the undistributed net income of the trust for such year. For purposes of this subsection, the undistributed net income and the taxes imposed on the trust for such preceding taxable year attributable to such undistributed net income shall be computed without regard to the accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year.
If adequate records are not available to determine the proper application of this subpart to an amount distributed by a trust, such amount shall be deemed to be an accumulation distribution consisting of undistributed net income earned during the earliest preceding taxable year of the trust in which it can be established that the trust was in existence.
No refund or credit shall be allowed to a trust or a beneficiary* of such trust for any preceding taxable year by reason of a distribution deemed to have been made by such trust in such year under this section.
Source credit: (Aug. 16, 1954, ch. 736, 68A Stat. 224; Pub. L. 87–834, § 7(c), Oct. 16, 1962, 76 Stat. 986; Pub. L. 91–172, title III, § 331(a), Dec. 30, 1969, 83 Stat. 593; Pub. L. 94–455, title VII, § 701(a)(2), Oct. 4, 1976, 90 Stat. 1577; Pub. L. 95–600, title IV, § 421(d), Nov. 6, 1978, 92 Stat. 2875; Pub. L. 96–222, title I, § 104(a)(4)(H)(vi), Apr. 1, 1980, 94 Stat. 218.)
- 1954Enacted · Act of Aug. 16, 1954, ch. 736
- 1962Amended · Pub. L. 87-834 · 76 Stat. 986
- 1969Amended · Pub. L. 91-172 · 83 Stat. 593
- 1976Amended · Pub. L. 94-455 · 90 Stat. 1577
- 1978Amended · Pub. L. 95-600 · 92 Stat. 2875
- 1980Amended · Pub. L. 96-222 · 94 Stat. 218
A history note hasn’t been published yet. The record shows enactment by ch. 736 on 1954-08-16.
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