§ 666. Accumulation distribution allocated to preceding years

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1954

   Aug. 16, 1954, ch. 736, 68A Stat. 224 · 68A Stat. 224

   Enacted · 26 U.S.C. § 666

   Aug. 16, 1954, ch. 736, 68A Stat. 224

   Source evidence

   Code source credit
   Aug. 16, 1954, ch. 736, 68A Stat. 224

2. 1962

   Revenue Act of 1962

   Pub. L. 87–834 § 7(c) · 76 Stat. 960

   1. Inserted · 26 U.S.C. § 666(a)

      Pub. L. 87–834 inserted “(other than a foreign trust created by a United States person)” after “In the case of a trust”

   2. Inserted · 26 U.S.C. § 666(a)

      Pub. L. 87–834 inserted sentence making this subsection applicable, in the case of a foreign trust created by a United States person, to the preceding taxable years of the trust without regard to any provision of the preceding sentences of this subsection which would (but for this sentence) limit its application to the 5 preceding taxable years

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 87–834 inserted “(other than a foreign trust created by a United States person)” after “In the case of a trust”, and inserted sentence making this subsection applicable, in the case of a foreign trust created by a United States person, to the preceding taxable years of the trust without regard to any provision of the preceding sentences of this subsection which would (but for this sentence) limit its application to the 5 preceding taxable years.

   Enacted provision · exact public law section
   (c) Allocation of Accumulation Distributions to Preceding Years.— Section 666(a) (relating to accumulation distribution allocated to 5 preceding years) is amended— (1) by striking out “(a) Amount Allocated.—In the case of a trust” and inserting in lieu thereof the following: “(a) Amount Allocated.— In the case of a trust (other than a foreign trust created by a United States person)”; and (2) by adding at the end thereof the following new sentence: “In the case of a foreign trust created by a United States person, this subsection shall apply to the preceding taxable years of the trust without regard to any provision of the preceding sentences which would (but for this sentence) limit its application to the 5 preceding taxable years.”

3. 1969

   Tax Reform Act of 1969

   Pub. L. 91–172 title III § 331(a) · 83 Stat. 487

   1. Substituted · 26 U.S.C. § 666(a)

      Pub. L. 91–172 substituted in first sentence “In the case of a trust which is subject to subpart (C)” for “In the case of a trust (other than a foreign trust created by a United States person) which for a taxable year beginning after December 31, 1953, is subject to subpart (C)”

   2. Substituted · 26 U.S.C. § 666(a)

      Pub. L. 91–172 substituted in first sentence “for a taxable year” for “for such taxable year”

   3. Substituted · 26 U.S.C. § 666(a)

      Pub. L. 91–172 substituted in first sentence “undistributed net income for all earlier preceding taxable years” for “undistributed net incomes for any taxable years intervening between the taxable year with respect to which the accumulation distribution is determined and such preceding taxable year”

   4. Substituted · 26 U.S.C. § 666(a)

      Pub. L. 91–172 substituted in first sentence “for such” for “of such”

   5. Inserted · 26 U.S.C. § 666(a)

      Pub. L. 91–172 inserted in first sentence “, commencing with the earliest of such years,” after “preceding taxable years”

   6. Struck · 26 U.S.C. § 666(a)

      Pub. L. 91–172 struck out “5” before “preceding taxable years” in first and third sentences and last sentence which read as follows: “In the case of a foreign trust created by a United States person, this subsection shall apply to the preceding taxable years of the trust without regard to any provision of the preceding sentences which would (but for this sentence) limit its application to the 5 preceding taxable years.”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 91–172 substituted in first sentence “In the case of a trust which is subject to subpart (C)” for “In the case of a trust (other than a foreign trust created by a United States person) which for a taxable year beginning after December 31, 1953, is subject to subpart (C)”, “for a taxable year” for “for such taxable year”, and “undistributed net income for all earlier preceding taxable years” for “undistributed net incomes for any taxable years intervening between the taxable year with respect to which the accumulation distribution is determined and such preceding taxable year” and in second sentence “for such” for “of such”, inserted in first sentence “, commencing with the earliest of such years,” after “preceding taxable years”, struck out “5” before “preceding taxable years” in first and third sentences and last sentence which read as follows: “In the case of a foreign trust created by a United States person, this subsection shall apply to the preceding taxable years of the trust without regard to any provision of the preceding sentences which would (but for this sentence) limit its application to the 5 preceding taxable years.”

   Enacted provision · exact public law section
   (a) In General.— Subpart D of part I of subchapter J of chapter 68A Stat. 223; 76 Stat. 986. 1 is amended to read as follows: SUBPART D— TREATMENT OF EXCESS DISTRIBUTIONS BY TRUSTS “Sec. 665. Definitions applicable to subpart D. “Sec. 666. Accumulation distribution allocated to preceding years. “Sec. 667. Denial of refund to trusts; authorization of credit to beneficiaries. “Sec. 668. Treatment of amounts deemed distributed in preceding years. “Sec. 669. Treatment of capital gain deemed distributed in preceding years. SEC. 665. DEFINITIONS APPLICABLE TO SUBPART D. “(a) Undistributed Net Income.— For purposes of this subpart the term ‘undistributed net income’ for any taxable year means the amount by which the distributable net income of the trust for such taxable year exceeds the sum of— “(1) the amounts for such taxable year specified in paragraphs 68A Stat. 220. 26 USC 661. (1) and (2) of section 661 (a), and “(2) the amount of taxes imposed on the trust attributable to such distributable net income. “(b) Accumulation Distribution.— For purposes of this subpart, the term ‘accumulation distribution’ means, for any taxable year of the trust, the amount by which— “(1) the amounts specified in paragraph (2) of section 661(a) for such taxable year, exceed “(2) distributable net income for such year reduced (but not below zero) by the amounts specified in paragraph (1) of section 661(a). “(c) Special Rule Applicable to Distributions by Certain Foreign Trusts.— For purposes of this subpart, any amount paid to a United States person which is from a payor who is not a United States person and which is derived directly or indirectly from a foreign trust created by a United States person shall be deemed in the year of payment to have been directly paid by the foreign trust. “(d) Taxes Imposed on the Trust.— For purposes of this subpart, the term ‘taxes imposed on the trust’ means the amount of the taxes which are imposed for any taxable year of the trust under this chapter (without regard to this subpart) and which, under regulations prescribed by the Secretary or his delegate, are properly allocable to the undistributed portions of distributable net income and gains in excess of losses from sales or exchanges of capital assets. The amount determined in the preceding sentence shall be reduced by any amount of such taxes deemed distributed under section 666 (b) and (c) or 669 (d) and (e) to any beneficiary. “(e) Preceding Taxable Year.— For purposes of this subpart— “(1) in the case of a trust (other than a foreign trust created by a United States person), the term ‘preceding taxable year’ does not include any taxable year of the trust— “(A) which precedes by more than 5 years the taxable year of the trust in which an accumulation distribution is made, if it is made in a taxable year beginning before January 1, 1974, “(B) which begins before January 1, 1969, in the case of an accumulation distribution made during a taxable year beginning after December 31, 1973, or “(C) which begins before January 1, 1969, in the case of a capital gain distribution made during a taxable year beginning after December 31, 1968; and “(2) in the case of a foreign trust created by a United States person, such term does not include any taxable year of the trust to which this part does not apply. In the case of a preceding taxable year with respect to which a trust qualifies (without regard to this subpart) under the provisions of subpart B, for purposes of the application of this subpart to such trust for such taxable year, such trust shall, in accordance with regulations prescribed by the Secretary or his delegate, be treated as a trust to which subpart C applies. “(f) Undistributed Capital Gain.— For purposes of this subpart, the term ‘undistributed capital gain’ means, for any taxable year of the trust beginning after December 31, 1968, the amount by which— “(1) gains in excess of losses from the sale or exchange of capital assets, 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 such taxable year, or (B) paid, permanently set aside, or used for the purposes specified in section 642(c), Ante, p. 558. exceed “(2) the amount of taxes imposed on the trust attributable to such gains. For purposes of paragraph (1), the deduction under section 1202 68A Stat. 320. 26 USC 1202. (relating to deduction for excess of capital gains over capital losses) shall not be taken into account. “(g) Capital Gain Distribution.— For purposes of this subpart, the term ‘capital gain distribution’ for any taxable year of the trust means, to the extent of undistributed capital gain for such taxable year, that portion of— “(1) the excess of the amounts specified in paragraph (2) of section 661(a) for such taxable year over distributable net income for such year reduced (but not below zero) by the amounts specified in paragraph (1) of section 661(a), over “(2) the undistributed net income of the trust for all preceding taxable years. “SEC. 666. ACCUMULATION DISTRIBUTION ALLOCATED TO PRECEDING YEARS. “(a) Amount Allocated.— In the case of a trust which is subject to subpart C, the amount of the accumulation distribution of such trust for a taxable year shall be deemed to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of each of the preceding taxable years, commencing with the earliest of such years, to the extent that such amount exceeds the total of any undistributed net income for all earlier preceding taxable years. The amount deemed to be distributed in any such preceding taxable year under the preceding sentence shall not exceed the undistributed net income for such preceding taxable year. For purposes of this subsection, undistributed net income for each of such preceding taxable years shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(b) Total Taxes Deemed Distributed.— If any portion of an accumulation distribution for any taxable year is deemed under subsection (a) to be an amount within the meaning of paragraph (2) 68A Stat. 220. 26 USC 661. 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 imposed on the trust for such preceding taxable year attributable to the undistributed net income. For purposes of this subsection the undistributed net income and the taxes imposed on the trust for such preceding taxable year attributable to such undistributed net income shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(c) Pro Rata Portion of Taxes Deemed Distributed.— If any portion of an accumulation distribution for any taxable year is deemed under subsection (a) to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of any preceding taxable year and such portion of the accumulation distribution is less than the undistributed net income for such preceding taxable year, the trust shall be deemed to have distributed on the last day of such preceding taxable year an additional amount within the meaning of paragraph (2) of section 661(a). Such additional amount shall be equal to the taxes imposed on the trust for such taxable year attributable to the undistributed net income multiplied by the ratio of the portion of the accumulation distribution to the undistributed net income of the trust for such year. For purposes of this subsection, the undistributed net income and the taxes imposed on the trust for such preceding taxable year attributable to such undistributed net income shall be computed without regard to the accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(d) Rule When Information Is Not Available.— If adequate records are not available to determine the proper application of this subpart to an amount distributed by a trust, such amount shall be deemed to be an accumulation distribution consisting of undistributed net income earned during the earliest preceding taxable year of the trust in which it can be established that the trust was in existence. “SEC. 667. DENIAL OF REFUND TO TRUSTS; AUTHORIZATION OF CREDIT TO BENEFICIARIES. “(a) Denial of Refund to Trusts.— No refund or credit shall be allowed to a trust for any preceding taxable year by reason of a distribution deemed to have been made by such trust in such year under section 666 or 669. “(b) Authorization of Credit to Beneficiary.— There shall be allowed as a credit (without interest) against the tax imposed by this subtitle on the beneficiary an amount equal to the amount of the taxes deemed distributed to such beneficiary by the trust under sections 666 (b) and (c) and 669 (d) and (e) during preceding taxable years of the trust on the last day of which the beneficiary was in being, reduced by the amount of the taxes deemed distributed to such beneficiary for such preceding taxable years to the extent that such taxes are taken into account under sections 668(b)(1) and 669(b) in determining the amount of the tax imposed by section 668. “SEC. 668. TREATMENT OF AMOUNTS DEEMED DISTRIBUTED IN PRECEDING YEARS. “(a) General Rule.— The total of the amounts which are treated under sections 666 and 669 as having been distributed by the trust in a preceding taxable year shall be included in the income of a beneficiary of the trust when paid, credited, or required to be distributed to the extent that such total would have been included in the income of such beneficiary under section 662(a)(2) and (b) if such total had been 68A Stat. 220. 26 USC 662. paid to such beneficiary on the last day of such preceding taxable year. The tax imposed by this subtitle on a beneficiary for a taxable year in which any such amount is included in his income shall be determined only as provided in this section and shall consist of the sum of— “(1) a partial tax computed on the taxable income reduced by an amount equal to the total of such amounts, at the rate and in the manner as if this section had not been enacted, “(2) a partial tax determined as provided in subsection (b) of this section, and “(3) in the case of a beneficiary of a trust which is not required to distribute all of its income currently, a partial tax determined as provided in section 669. For purposes of this subpart, a trust shall not be considered to be a trust which is not required to distribute all of its income currently for any taxable year prior to the first taxable year in which income is accumulated. “(b) Tax on Distribution.— “(1) Alternative methods.— Except as provided in paragraph (2), the partial tax imposed by subsection (a)(2) shall be the lesser of— “(A) the aggregate of the taxes attributable to the amounts deemed distributed under section 666 had they been included in the gross income of the beneficiary on the last day of each respective preceding taxable year, or “(B) the tax determined by multiplying, by the number of preceding taxable years of the trust, on the last day of which an amount is deemed under section 666(a) to have been distributed, the average of the increase in tax attributable to recomputing the beneficiary’s gross income for each of the beneficiary’s 3 taxable years immediately preceding the year of the accumulation distribution by adding to the income of each of such years an amount determined by dividing the amount deemed distributed under section 666 and required to be included in income under subsection (a) by such number of preceding taxable years of the trust, less an amount equal to the amount of taxes deemed distributed to the beneficiary under sections 666 (b) and (c). “(2) Special rules.— “(A) If a beneficiary was not in existence on the last day of a preceding taxable year of the trust with respect to which a distribution is deemed made under section 666(a), the partial tax under either paragraph (1)(A) or (1)(B) shall be computed as if the beneficiary were in existence on the last day of such year on the basis that the beneficiary had no gross income (other than amounts deemed distributed to him under sections 666 and 669 by the same or other trusts) and no deductions for such year. “(B) The partial tax shall not be computed under the provisions of subparagraph (B) of paragraph (1) if, in the same prior taxable year of the beneficiary in which any part of the accumulation distribution is deemed under section 666(a) to have been distributed to such beneficiary, some part of prior accumulation distributions by each of two or more other trusts is deemed under section 666(a) to have been distributed to such beneficiary. “(C) If the partial tax is computed under paragraph (1)(B), and the amount of the undistributed net income deemed distributed in any preceding taxable year of the trust is less than 25 percent of the amount of the accumulation distribution divided by the number of preceding taxable years to which the accumulation distribution is allocated under section 666(a), the number of preceding taxable years of the trust with respect to which an amount is deemed distributed to a beneficiary under section 666(a) shall be determined without regard to such year. “(3) Effect of other accumulation distributions and capital gain distributions.— In computing the partial tax under paragraph (1) for any beneficiary, the income of such beneficiary for each of his prior taxable years— “(A) shall include amounts previously deemed distributed to such beneficiary in such year under section 666 or 669 as a result of prior accumulation distributions or capital gain distributions (whether from the same or another trust), and “(B) shall not include amounts deemed distributed to such beneficiary in such year under section 669 as a result of a capital gain distribution from the same trust in the current year. “(4) Multiple distributions in the same taxable tear.— In the case of accumulation distributions made from more than one trust which are includible in the income of a beneficiary in the same taxable year, the distributions shall be deemed to have been made consecutively in whichever order the beneficiary shall determine. “(5) Information requirements with respect to beneficiary.— “(A) Except as provided in subparagraph (B), the partial tax shall not be computed under the provisions of paragraph (1)(A) unless the beneficiary supplies such information with respect to his income, for each taxable year with which or in which ends a taxable year of the trust on the last day of which an amount is deemed distributed under section 666(a), as the Secretary or his delegate prescribes by regulations. “(B) If by reason of paragraph (2)(B) the provisions of paragraph (1)(B) do not apply, the determination of the amount of the beneficiary’s income for a taxable year for which the beneficiary has not supplied the information required under subparagraph (A) shall be made by the Secretary or his delegate on the basis of information available to him. “SEC. 669. TREATMENT OF CAPITAL GAIN DEEMED DISTRIBUTED IN PRECEDING YEARS. “(a) Amount Allocated.— In the case of a trust which is not required to distribute all of its income currently, the amount of a capital gain distribution of such trust for a taxable year shall be deemed to be an amount properly paid, credited, or required to be 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 capital gain 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 capital gain for such preceding taxable year. For purposes of this subsection, undistributed capital gain for each of such preceding taxable years shall be computed without regard to such capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(b) Tax on Distribution.— The partial tax imposed by section 668 (a)(3) shall be the lesser of— “(1) the aggregate of the taxes attributable to the amounts deemed distributed under this section, had such amounts been included in the gross income of the beneficiary on the last day of each respective preceding taxable year, or “(2) the tax determined by multiplying by the number of preceding taxable years of the trust, on the last day of which net gains from the sale or exchange of capital assets are deemed under subsection (a) to have been distributed, the average of the increase in tax attributable to recomputing the beneficiary’s gross income for each of the beneficiary’s 3 taxable years immediately preceding the year of the capital gain distribution by adding to the income of each of such years an amount determined by dividing the total of the amounts deemed distributed under this section and required to be included in income under section 668(a) by such number of preceding taxable years of the trust, less an amount equal to the amount of taxes deemed distributed to the beneficiary under subsections (d) and (e) which are attributable to the capital gain distribution. “(c) Effect of Other Distributions; Special Rules, Etc.— In computing the partial tax under subsection (b) for any beneficiary, the income of such beneficiary for each of his prior taxable years— “(1) shall include amounts previously deemed distributed to such beneficiary in such year under section 666 or 669 as a result of prior accumulation distributions or capital gain distributions (whether from the same or another trust), and “(2) shall include amounts deemed distributed to such beneficiary in such year under section 666 as a result of an accumulation distribution from the same trust in the current year. Under regulations prescribed by the Secretary or his delegate, rules similar to the rules provided by paragraphs (2), (4), and (5) of section 668(b) shall be applied for purposes of this section. “(d) Total Taxes Deemed Distributed.— If any portion of a capital gain distribution for any taxable year is deemed under subsection (a) to be an amount properly paid, credited or required to be distributed on the last day of any preceding taxable year, and such portion of such capital gain distribution is not less than the undistributed capital gain for such preceding taxable year, the trust shall be deemed to have properly distributed on the last day of such preceding taxable year an additional amount. Such additional amount shall be equal to the taxes imposed on the trust for such preceding taxable year attributable to such undistributed capital gain. For purposes of this subsection, the undistributed capital gain and the taxes imposed on the trust for such preceding taxable year attributable to such gain shall be computed without regard to such capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(e) Pro Rata Portion of Taxes Deemed Distributed.— If any portion of a capital gain distribution for any taxable year is deemed under subsection (a) to be an amount properly paid, credited, or required to be distributed on the last day of any preceding taxable year and such portion of the capital gain distribution is less than the undistributed capital gain for such preceding taxable year, the trust shall be deemed to have properly distributed on the last day of such preceding taxable year an additional amount. Such additional amount shall be equal to the taxes imposed on the trust for such taxable year attributable to such undistributed capital gain multiplied by the ratio of the portion of the capital gain distribution to the undistributed capital gain of the trust for such year. For purposes of this subsection the undistributed capital gain and the taxes imposed on the trust for such preceding taxable year attributable to such gain shall be computed without regard to the capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(f) Character of Capital Gain.— For purposes of this section, the character of the capital gain of a trust for any taxable year with respect to a beneficiary shall be the same as it was with respect to the trust.”

4. 1969

   Tax Reform Act of 1969

   Pub. L. 91–172 title III § 331(a) · 83 Stat. 487

   Inserted · 26 U.S.C. § 666(b)

   Pub. L. 91–172 inserted “attributable to the undistributed net income” after “taxable year” in second sentence and “attributable to such undistributed net income” before “shall be computed” in third sentence

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 91–172 inserted “attributable to the undistributed net income” after “taxable year” in second sentence and “attributable to such undistributed net income” before “shall be computed” in third sentence.

   Enacted provision · exact public law section
   (a) In General.— Subpart D of part I of subchapter J of chapter 68A Stat. 223; 76 Stat. 986. 1 is amended to read as follows: SUBPART D— TREATMENT OF EXCESS DISTRIBUTIONS BY TRUSTS “Sec. 665. Definitions applicable to subpart D. “Sec. 666. Accumulation distribution allocated to preceding years. “Sec. 667. Denial of refund to trusts; authorization of credit to beneficiaries. “Sec. 668. Treatment of amounts deemed distributed in preceding years. “Sec. 669. Treatment of capital gain deemed distributed in preceding years. SEC. 665. DEFINITIONS APPLICABLE TO SUBPART D. “(a) Undistributed Net Income.— For purposes of this subpart the term ‘undistributed net income’ for any taxable year means the amount by which the distributable net income of the trust for such taxable year exceeds the sum of— “(1) the amounts for such taxable year specified in paragraphs 68A Stat. 220. 26 USC 661. (1) and (2) of section 661 (a), and “(2) the amount of taxes imposed on the trust attributable to such distributable net income. “(b) Accumulation Distribution.— For purposes of this subpart, the term ‘accumulation distribution’ means, for any taxable year of the trust, the amount by which— “(1) the amounts specified in paragraph (2) of section 661(a) for such taxable year, exceed “(2) distributable net income for such year reduced (but not below zero) by the amounts specified in paragraph (1) of section 661(a). “(c) Special Rule Applicable to Distributions by Certain Foreign Trusts.— For purposes of this subpart, any amount paid to a United States person which is from a payor who is not a United States person and which is derived directly or indirectly from a foreign trust created by a United States person shall be deemed in the year of payment to have been directly paid by the foreign trust. “(d) Taxes Imposed on the Trust.— For purposes of this subpart, the term ‘taxes imposed on the trust’ means the amount of the taxes which are imposed for any taxable year of the trust under this chapter (without regard to this subpart) and which, under regulations prescribed by the Secretary or his delegate, are properly allocable to the undistributed portions of distributable net income and gains in excess of losses from sales or exchanges of capital assets. The amount determined in the preceding sentence shall be reduced by any amount of such taxes deemed distributed under section 666 (b) and (c) or 669 (d) and (e) to any beneficiary. “(e) Preceding Taxable Year.— For purposes of this subpart— “(1) in the case of a trust (other than a foreign trust created by a United States person), the term ‘preceding taxable year’ does not include any taxable year of the trust— “(A) which precedes by more than 5 years the taxable year of the trust in which an accumulation distribution is made, if it is made in a taxable year beginning before January 1, 1974, “(B) which begins before January 1, 1969, in the case of an accumulation distribution made during a taxable year beginning after December 31, 1973, or “(C) which begins before January 1, 1969, in the case of a capital gain distribution made during a taxable year beginning after December 31, 1968; and “(2) in the case of a foreign trust created by a United States person, such term does not include any taxable year of the trust to which this part does not apply. In the case of a preceding taxable year with respect to which a trust qualifies (without regard to this subpart) under the provisions of subpart B, for purposes of the application of this subpart to such trust for such taxable year, such trust shall, in accordance with regulations prescribed by the Secretary or his delegate, be treated as a trust to which subpart C applies. “(f) Undistributed Capital Gain.— For purposes of this subpart, the term ‘undistributed capital gain’ means, for any taxable year of the trust beginning after December 31, 1968, the amount by which— “(1) gains in excess of losses from the sale or exchange of capital assets, 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 such taxable year, or (B) paid, permanently set aside, or used for the purposes specified in section 642(c), Ante, p. 558. exceed “(2) the amount of taxes imposed on the trust attributable to such gains. For purposes of paragraph (1), the deduction under section 1202 68A Stat. 320. 26 USC 1202. (relating to deduction for excess of capital gains over capital losses) shall not be taken into account. “(g) Capital Gain Distribution.— For purposes of this subpart, the term ‘capital gain distribution’ for any taxable year of the trust means, to the extent of undistributed capital gain for such taxable year, that portion of— “(1) the excess of the amounts specified in paragraph (2) of section 661(a) for such taxable year over distributable net income for such year reduced (but not below zero) by the amounts specified in paragraph (1) of section 661(a), over “(2) the undistributed net income of the trust for all preceding taxable years. “SEC. 666. ACCUMULATION DISTRIBUTION ALLOCATED TO PRECEDING YEARS. “(a) Amount Allocated.— In the case of a trust which is subject to subpart C, the amount of the accumulation distribution of such trust for a taxable year shall be deemed to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of each of the preceding taxable years, commencing with the earliest of such years, to the extent that such amount exceeds the total of any undistributed net income for all earlier preceding taxable years. The amount deemed to be distributed in any such preceding taxable year under the preceding sentence shall not exceed the undistributed net income for such preceding taxable year. For purposes of this subsection, undistributed net income for each of such preceding taxable years shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(b) Total Taxes Deemed Distributed.— If any portion of an accumulation distribution for any taxable year is deemed under subsection (a) to be an amount within the meaning of paragraph (2) 68A Stat. 220. 26 USC 661. 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 imposed on the trust for such preceding taxable year attributable to the undistributed net income. For purposes of this subsection the undistributed net income and the taxes imposed on the trust for such preceding taxable year attributable to such undistributed net income shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(c) Pro Rata Portion of Taxes Deemed Distributed.— If any portion of an accumulation distribution for any taxable year is deemed under subsection (a) to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of any preceding taxable year and such portion of the accumulation distribution is less than the undistributed net income for such preceding taxable year, the trust shall be deemed to have distributed on the last day of such preceding taxable year an additional amount within the meaning of paragraph (2) of section 661(a). Such additional amount shall be equal to the taxes imposed on the trust for such taxable year attributable to the undistributed net income multiplied by the ratio of the portion of the accumulation distribution to the undistributed net income of the trust for such year. For purposes of this subsection, the undistributed net income and the taxes imposed on the trust for such preceding taxable year attributable to such undistributed net income shall be computed without regard to the accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(d) Rule When Information Is Not Available.— If adequate records are not available to determine the proper application of this subpart to an amount distributed by a trust, such amount shall be deemed to be an accumulation distribution consisting of undistributed net income earned during the earliest preceding taxable year of the trust in which it can be established that the trust was in existence. “SEC. 667. DENIAL OF REFUND TO TRUSTS; AUTHORIZATION OF CREDIT TO BENEFICIARIES. “(a) Denial of Refund to Trusts.— No refund or credit shall be allowed to a trust for any preceding taxable year by reason of a distribution deemed to have been made by such trust in such year under section 666 or 669. “(b) Authorization of Credit to Beneficiary.— There shall be allowed as a credit (without interest) against the tax imposed by this subtitle on the beneficiary an amount equal to the amount of the taxes deemed distributed to such beneficiary by the trust under sections 666 (b) and (c) and 669 (d) and (e) during preceding taxable years of the trust on the last day of which the beneficiary was in being, reduced by the amount of the taxes deemed distributed to such beneficiary for such preceding taxable years to the extent that such taxes are taken into account under sections 668(b)(1) and 669(b) in determining the amount of the tax imposed by section 668. “SEC. 668. TREATMENT OF AMOUNTS DEEMED DISTRIBUTED IN PRECEDING YEARS. “(a) General Rule.— The total of the amounts which are treated under sections 666 and 669 as having been distributed by the trust in a preceding taxable year shall be included in the income of a beneficiary of the trust when paid, credited, or required to be distributed to the extent that such total would have been included in the income of such beneficiary under section 662(a)(2) and (b) if such total had been 68A Stat. 220. 26 USC 662. paid to such beneficiary on the last day of such preceding taxable year. The tax imposed by this subtitle on a beneficiary for a taxable year in which any such amount is included in his income shall be determined only as provided in this section and shall consist of the sum of— “(1) a partial tax computed on the taxable income reduced by an amount equal to the total of such amounts, at the rate and in the manner as if this section had not been enacted, “(2) a partial tax determined as provided in subsection (b) of this section, and “(3) in the case of a beneficiary of a trust which is not required to distribute all of its income currently, a partial tax determined as provided in section 669. For purposes of this subpart, a trust shall not be considered to be a trust which is not required to distribute all of its income currently for any taxable year prior to the first taxable year in which income is accumulated. “(b) Tax on Distribution.— “(1) Alternative methods.— Except as provided in paragraph (2), the partial tax imposed by subsection (a)(2) shall be the lesser of— “(A) the aggregate of the taxes attributable to the amounts deemed distributed under section 666 had they been included in the gross income of the beneficiary on the last day of each respective preceding taxable year, or “(B) the tax determined by multiplying, by the number of preceding taxable years of the trust, on the last day of which an amount is deemed under section 666(a) to have been distributed, the average of the increase in tax attributable to recomputing the beneficiary’s gross income for each of the beneficiary’s 3 taxable years immediately preceding the year of the accumulation distribution by adding to the income of each of such years an amount determined by dividing the amount deemed distributed under section 666 and required to be included in income under subsection (a) by such number of preceding taxable years of the trust, less an amount equal to the amount of taxes deemed distributed to the beneficiary under sections 666 (b) and (c). “(2) Special rules.— “(A) If a beneficiary was not in existence on the last day of a preceding taxable year of the trust with respect to which a distribution is deemed made under section 666(a), the partial tax under either paragraph (1)(A) or (1)(B) shall be computed as if the beneficiary were in existence on the last day of such year on the basis that the beneficiary had no gross income (other than amounts deemed distributed to him under sections 666 and 669 by the same or other trusts) and no deductions for such year. “(B) The partial tax shall not be computed under the provisions of subparagraph (B) of paragraph (1) if, in the same prior taxable year of the beneficiary in which any part of the accumulation distribution is deemed under section 666(a) to have been distributed to such beneficiary, some part of prior accumulation distributions by each of two or more other trusts is deemed under section 666(a) to have been distributed to such beneficiary. “(C) If the partial tax is computed under paragraph (1)(B), and the amount of the undistributed net income deemed distributed in any preceding taxable year of the trust is less than 25 percent of the amount of the accumulation distribution divided by the number of preceding taxable years to which the accumulation distribution is allocated under section 666(a), the number of preceding taxable years of the trust with respect to which an amount is deemed distributed to a beneficiary under section 666(a) shall be determined without regard to such year. “(3) Effect of other accumulation distributions and capital gain distributions.— In computing the partial tax under paragraph (1) for any beneficiary, the income of such beneficiary for each of his prior taxable years— “(A) shall include amounts previously deemed distributed to such beneficiary in such year under section 666 or 669 as a result of prior accumulation distributions or capital gain distributions (whether from the same or another trust), and “(B) shall not include amounts deemed distributed to such beneficiary in such year under section 669 as a result of a capital gain distribution from the same trust in the current year. “(4) Multiple distributions in the same taxable tear.— In the case of accumulation distributions made from more than one trust which are includible in the income of a beneficiary in the same taxable year, the distributions shall be deemed to have been made consecutively in whichever order the beneficiary shall determine. “(5) Information requirements with respect to beneficiary.— “(A) Except as provided in subparagraph (B), the partial tax shall not be computed under the provisions of paragraph (1)(A) unless the beneficiary supplies such information with respect to his income, for each taxable year with which or in which ends a taxable year of the trust on the last day of which an amount is deemed distributed under section 666(a), as the Secretary or his delegate prescribes by regulations. “(B) If by reason of paragraph (2)(B) the provisions of paragraph (1)(B) do not apply, the determination of the amount of the beneficiary’s income for a taxable year for which the beneficiary has not supplied the information required under subparagraph (A) shall be made by the Secretary or his delegate on the basis of information available to him. “SEC. 669. TREATMENT OF CAPITAL GAIN DEEMED DISTRIBUTED IN PRECEDING YEARS. “(a) Amount Allocated.— In the case of a trust which is not required to distribute all of its income currently, the amount of a capital gain distribution of such trust for a taxable year shall be deemed to be an amount properly paid, credited, or required to be 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 capital gain 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 capital gain for such preceding taxable year. For purposes of this subsection, undistributed capital gain for each of such preceding taxable years shall be computed without regard to such capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(b) Tax on Distribution.— The partial tax imposed by section 668 (a)(3) shall be the lesser of— “(1) the aggregate of the taxes attributable to the amounts deemed distributed under this section, had such amounts been included in the gross income of the beneficiary on the last day of each respective preceding taxable year, or “(2) the tax determined by multiplying by the number of preceding taxable years of the trust, on the last day of which net gains from the sale or exchange of capital assets are deemed under subsection (a) to have been distributed, the average of the increase in tax attributable to recomputing the beneficiary’s gross income for each of the beneficiary’s 3 taxable years immediately preceding the year of the capital gain distribution by adding to the income of each of such years an amount determined by dividing the total of the amounts deemed distributed under this section and required to be included in income under section 668(a) by such number of preceding taxable years of the trust, less an amount equal to the amount of taxes deemed distributed to the beneficiary under subsections (d) and (e) which are attributable to the capital gain distribution. “(c) Effect of Other Distributions; Special Rules, Etc.— In computing the partial tax under subsection (b) for any beneficiary, the income of such beneficiary for each of his prior taxable years— “(1) shall include amounts previously deemed distributed to such beneficiary in such year under section 666 or 669 as a result of prior accumulation distributions or capital gain distributions (whether from the same or another trust), and “(2) shall include amounts deemed distributed to such beneficiary in such year under section 666 as a result of an accumulation distribution from the same trust in the current year. Under regulations prescribed by the Secretary or his delegate, rules similar to the rules provided by paragraphs (2), (4), and (5) of section 668(b) shall be applied for purposes of this section. “(d) Total Taxes Deemed Distributed.— If any portion of a capital gain distribution for any taxable year is deemed under subsection (a) to be an amount properly paid, credited or required to be distributed on the last day of any preceding taxable year, and such portion of such capital gain distribution is not less than the undistributed capital gain for such preceding taxable year, the trust shall be deemed to have properly distributed on the last day of such preceding taxable year an additional amount. Such additional amount shall be equal to the taxes imposed on the trust for such preceding taxable year attributable to such undistributed capital gain. For purposes of this subsection, the undistributed capital gain and the taxes imposed on the trust for such preceding taxable year attributable to such gain shall be computed without regard to such capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(e) Pro Rata Portion of Taxes Deemed Distributed.— If any portion of a capital gain distribution for any taxable year is deemed under subsection (a) to be an amount properly paid, credited, or required to be distributed on the last day of any preceding taxable year and such portion of the capital gain distribution is less than the undistributed capital gain for such preceding taxable year, the trust shall be deemed to have properly distributed on the last day of such preceding taxable year an additional amount. Such additional amount shall be equal to the taxes imposed on the trust for such taxable year attributable to such undistributed capital gain multiplied by the ratio of the portion of the capital gain distribution to the undistributed capital gain of the trust for such year. For purposes of this subsection the undistributed capital gain and the taxes imposed on the trust for such preceding taxable year attributable to such gain shall be computed without regard to the capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(f) Character of Capital Gain.— For purposes of this section, the character of the capital gain of a trust for any taxable year with respect to a beneficiary shall be the same as it was with respect to the trust.”

5. 1969

   Tax Reform Act of 1969

   Pub. L. 91–172 title III § 331(a) · 83 Stat. 487

   Inserted · 26 U.S.C. § 666(c)

   Pub. L. 91–172 inserted “attributable to the undistributed net income” before “multiplied by the ratio” in second sentence and “attributable to such undistributed net income” before “shall be computed” in third sentence

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 91–172 inserted “attributable to the undistributed net income” before “multiplied by the ratio” in second sentence and “attributable to such undistributed net income” before “shall be computed” in third sentence.

   Enacted provision · exact public law section
   (a) In General.— Subpart D of part I of subchapter J of chapter 68A Stat. 223; 76 Stat. 986. 1 is amended to read as follows: SUBPART D— TREATMENT OF EXCESS DISTRIBUTIONS BY TRUSTS “Sec. 665. Definitions applicable to subpart D. “Sec. 666. Accumulation distribution allocated to preceding years. “Sec. 667. Denial of refund to trusts; authorization of credit to beneficiaries. “Sec. 668. Treatment of amounts deemed distributed in preceding years. “Sec. 669. Treatment of capital gain deemed distributed in preceding years. SEC. 665. DEFINITIONS APPLICABLE TO SUBPART D. “(a) Undistributed Net Income.— For purposes of this subpart the term ‘undistributed net income’ for any taxable year means the amount by which the distributable net income of the trust for such taxable year exceeds the sum of— “(1) the amounts for such taxable year specified in paragraphs 68A Stat. 220. 26 USC 661. (1) and (2) of section 661 (a), and “(2) the amount of taxes imposed on the trust attributable to such distributable net income. “(b) Accumulation Distribution.— For purposes of this subpart, the term ‘accumulation distribution’ means, for any taxable year of the trust, the amount by which— “(1) the amounts specified in paragraph (2) of section 661(a) for such taxable year, exceed “(2) distributable net income for such year reduced (but not below zero) by the amounts specified in paragraph (1) of section 661(a). “(c) Special Rule Applicable to Distributions by Certain Foreign Trusts.— For purposes of this subpart, any amount paid to a United States person which is from a payor who is not a United States person and which is derived directly or indirectly from a foreign trust created by a United States person shall be deemed in the year of payment to have been directly paid by the foreign trust. “(d) Taxes Imposed on the Trust.— For purposes of this subpart, the term ‘taxes imposed on the trust’ means the amount of the taxes which are imposed for any taxable year of the trust under this chapter (without regard to this subpart) and which, under regulations prescribed by the Secretary or his delegate, are properly allocable to the undistributed portions of distributable net income and gains in excess of losses from sales or exchanges of capital assets. The amount determined in the preceding sentence shall be reduced by any amount of such taxes deemed distributed under section 666 (b) and (c) or 669 (d) and (e) to any beneficiary. “(e) Preceding Taxable Year.— For purposes of this subpart— “(1) in the case of a trust (other than a foreign trust created by a United States person), the term ‘preceding taxable year’ does not include any taxable year of the trust— “(A) which precedes by more than 5 years the taxable year of the trust in which an accumulation distribution is made, if it is made in a taxable year beginning before January 1, 1974, “(B) which begins before January 1, 1969, in the case of an accumulation distribution made during a taxable year beginning after December 31, 1973, or “(C) which begins before January 1, 1969, in the case of a capital gain distribution made during a taxable year beginning after December 31, 1968; and “(2) in the case of a foreign trust created by a United States person, such term does not include any taxable year of the trust to which this part does not apply. In the case of a preceding taxable year with respect to which a trust qualifies (without regard to this subpart) under the provisions of subpart B, for purposes of the application of this subpart to such trust for such taxable year, such trust shall, in accordance with regulations prescribed by the Secretary or his delegate, be treated as a trust to which subpart C applies. “(f) Undistributed Capital Gain.— For purposes of this subpart, the term ‘undistributed capital gain’ means, for any taxable year of the trust beginning after December 31, 1968, the amount by which— “(1) gains in excess of losses from the sale or exchange of capital assets, 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 such taxable year, or (B) paid, permanently set aside, or used for the purposes specified in section 642(c), Ante, p. 558. exceed “(2) the amount of taxes imposed on the trust attributable to such gains. For purposes of paragraph (1), the deduction under section 1202 68A Stat. 320. 26 USC 1202. (relating to deduction for excess of capital gains over capital losses) shall not be taken into account. “(g) Capital Gain Distribution.— For purposes of this subpart, the term ‘capital gain distribution’ for any taxable year of the trust means, to the extent of undistributed capital gain for such taxable year, that portion of— “(1) the excess of the amounts specified in paragraph (2) of section 661(a) for such taxable year over distributable net income for such year reduced (but not below zero) by the amounts specified in paragraph (1) of section 661(a), over “(2) the undistributed net income of the trust for all preceding taxable years. “SEC. 666. ACCUMULATION DISTRIBUTION ALLOCATED TO PRECEDING YEARS. “(a) Amount Allocated.— In the case of a trust which is subject to subpart C, the amount of the accumulation distribution of such trust for a taxable year shall be deemed to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of each of the preceding taxable years, commencing with the earliest of such years, to the extent that such amount exceeds the total of any undistributed net income for all earlier preceding taxable years. The amount deemed to be distributed in any such preceding taxable year under the preceding sentence shall not exceed the undistributed net income for such preceding taxable year. For purposes of this subsection, undistributed net income for each of such preceding taxable years shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(b) Total Taxes Deemed Distributed.— If any portion of an accumulation distribution for any taxable year is deemed under subsection (a) to be an amount within the meaning of paragraph (2) 68A Stat. 220. 26 USC 661. 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 imposed on the trust for such preceding taxable year attributable to the undistributed net income. For purposes of this subsection the undistributed net income and the taxes imposed on the trust for such preceding taxable year attributable to such undistributed net income shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(c) Pro Rata Portion of Taxes Deemed Distributed.— If any portion of an accumulation distribution for any taxable year is deemed under subsection (a) to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of any preceding taxable year and such portion of the accumulation distribution is less than the undistributed net income for such preceding taxable year, the trust shall be deemed to have distributed on the last day of such preceding taxable year an additional amount within the meaning of paragraph (2) of section 661(a). Such additional amount shall be equal to the taxes imposed on the trust for such taxable year attributable to the undistributed net income multiplied by the ratio of the portion of the accumulation distribution to the undistributed net income of the trust for such year. For purposes of this subsection, the undistributed net income and the taxes imposed on the trust for such preceding taxable year attributable to such undistributed net income shall be computed without regard to the accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(d) Rule When Information Is Not Available.— If adequate records are not available to determine the proper application of this subpart to an amount distributed by a trust, such amount shall be deemed to be an accumulation distribution consisting of undistributed net income earned during the earliest preceding taxable year of the trust in which it can be established that the trust was in existence. “SEC. 667. DENIAL OF REFUND TO TRUSTS; AUTHORIZATION OF CREDIT TO BENEFICIARIES. “(a) Denial of Refund to Trusts.— No refund or credit shall be allowed to a trust for any preceding taxable year by reason of a distribution deemed to have been made by such trust in such year under section 666 or 669. “(b) Authorization of Credit to Beneficiary.— There shall be allowed as a credit (without interest) against the tax imposed by this subtitle on the beneficiary an amount equal to the amount of the taxes deemed distributed to such beneficiary by the trust under sections 666 (b) and (c) and 669 (d) and (e) during preceding taxable years of the trust on the last day of which the beneficiary was in being, reduced by the amount of the taxes deemed distributed to such beneficiary for such preceding taxable years to the extent that such taxes are taken into account under sections 668(b)(1) and 669(b) in determining the amount of the tax imposed by section 668. “SEC. 668. TREATMENT OF AMOUNTS DEEMED DISTRIBUTED IN PRECEDING YEARS. “(a) General Rule.— The total of the amounts which are treated under sections 666 and 669 as having been distributed by the trust in a preceding taxable year shall be included in the income of a beneficiary of the trust when paid, credited, or required to be distributed to the extent that such total would have been included in the income of such beneficiary under section 662(a)(2) and (b) if such total had been 68A Stat. 220. 26 USC 662. paid to such beneficiary on the last day of such preceding taxable year. The tax imposed by this subtitle on a beneficiary for a taxable year in which any such amount is included in his income shall be determined only as provided in this section and shall consist of the sum of— “(1) a partial tax computed on the taxable income reduced by an amount equal to the total of such amounts, at the rate and in the manner as if this section had not been enacted, “(2) a partial tax determined as provided in subsection (b) of this section, and “(3) in the case of a beneficiary of a trust which is not required to distribute all of its income currently, a partial tax determined as provided in section 669. For purposes of this subpart, a trust shall not be considered to be a trust which is not required to distribute all of its income currently for any taxable year prior to the first taxable year in which income is accumulated. “(b) Tax on Distribution.— “(1) Alternative methods.— Except as provided in paragraph (2), the partial tax imposed by subsection (a)(2) shall be the lesser of— “(A) the aggregate of the taxes attributable to the amounts deemed distributed under section 666 had they been included in the gross income of the beneficiary on the last day of each respective preceding taxable year, or “(B) the tax determined by multiplying, by the number of preceding taxable years of the trust, on the last day of which an amount is deemed under section 666(a) to have been distributed, the average of the increase in tax attributable to recomputing the beneficiary’s gross income for each of the beneficiary’s 3 taxable years immediately preceding the year of the accumulation distribution by adding to the income of each of such years an amount determined by dividing the amount deemed distributed under section 666 and required to be included in income under subsection (a) by such number of preceding taxable years of the trust, less an amount equal to the amount of taxes deemed distributed to the beneficiary under sections 666 (b) and (c). “(2) Special rules.— “(A) If a beneficiary was not in existence on the last day of a preceding taxable year of the trust with respect to which a distribution is deemed made under section 666(a), the partial tax under either paragraph (1)(A) or (1)(B) shall be computed as if the beneficiary were in existence on the last day of such year on the basis that the beneficiary had no gross income (other than amounts deemed distributed to him under sections 666 and 669 by the same or other trusts) and no deductions for such year. “(B) The partial tax shall not be computed under the provisions of subparagraph (B) of paragraph (1) if, in the same prior taxable year of the beneficiary in which any part of the accumulation distribution is deemed under section 666(a) to have been distributed to such beneficiary, some part of prior accumulation distributions by each of two or more other trusts is deemed under section 666(a) to have been distributed to such beneficiary. “(C) If the partial tax is computed under paragraph (1)(B), and the amount of the undistributed net income deemed distributed in any preceding taxable year of the trust is less than 25 percent of the amount of the accumulation distribution divided by the number of preceding taxable years to which the accumulation distribution is allocated under section 666(a), the number of preceding taxable years of the trust with respect to which an amount is deemed distributed to a beneficiary under section 666(a) shall be determined without regard to such year. “(3) Effect of other accumulation distributions and capital gain distributions.— In computing the partial tax under paragraph (1) for any beneficiary, the income of such beneficiary for each of his prior taxable years— “(A) shall include amounts previously deemed distributed to such beneficiary in such year under section 666 or 669 as a result of prior accumulation distributions or capital gain distributions (whether from the same or another trust), and “(B) shall not include amounts deemed distributed to such beneficiary in such year under section 669 as a result of a capital gain distribution from the same trust in the current year. “(4) Multiple distributions in the same taxable tear.— In the case of accumulation distributions made from more than one trust which are includible in the income of a beneficiary in the same taxable year, the distributions shall be deemed to have been made consecutively in whichever order the beneficiary shall determine. “(5) Information requirements with respect to beneficiary.— “(A) Except as provided in subparagraph (B), the partial tax shall not be computed under the provisions of paragraph (1)(A) unless the beneficiary supplies such information with respect to his income, for each taxable year with which or in which ends a taxable year of the trust on the last day of which an amount is deemed distributed under section 666(a), as the Secretary or his delegate prescribes by regulations. “(B) If by reason of paragraph (2)(B) the provisions of paragraph (1)(B) do not apply, the determination of the amount of the beneficiary’s income for a taxable year for which the beneficiary has not supplied the information required under subparagraph (A) shall be made by the Secretary or his delegate on the basis of information available to him. “SEC. 669. TREATMENT OF CAPITAL GAIN DEEMED DISTRIBUTED IN PRECEDING YEARS. “(a) Amount Allocated.— In the case of a trust which is not required to distribute all of its income currently, the amount of a capital gain distribution of such trust for a taxable year shall be deemed to be an amount properly paid, credited, or required to be 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 capital gain 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 capital gain for such preceding taxable year. For purposes of this subsection, undistributed capital gain for each of such preceding taxable years shall be computed without regard to such capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(b) Tax on Distribution.— The partial tax imposed by section 668 (a)(3) shall be the lesser of— “(1) the aggregate of the taxes attributable to the amounts deemed distributed under this section, had such amounts been included in the gross income of the beneficiary on the last day of each respective preceding taxable year, or “(2) the tax determined by multiplying by the number of preceding taxable years of the trust, on the last day of which net gains from the sale or exchange of capital assets are deemed under subsection (a) to have been distributed, the average of the increase in tax attributable to recomputing the beneficiary’s gross income for each of the beneficiary’s 3 taxable years immediately preceding the year of the capital gain distribution by adding to the income of each of such years an amount determined by dividing the total of the amounts deemed distributed under this section and required to be included in income under section 668(a) by such number of preceding taxable years of the trust, less an amount equal to the amount of taxes deemed distributed to the beneficiary under subsections (d) and (e) which are attributable to the capital gain distribution. “(c) Effect of Other Distributions; Special Rules, Etc.— In computing the partial tax under subsection (b) for any beneficiary, the income of such beneficiary for each of his prior taxable years— “(1) shall include amounts previously deemed distributed to such beneficiary in such year under section 666 or 669 as a result of prior accumulation distributions or capital gain distributions (whether from the same or another trust), and “(2) shall include amounts deemed distributed to such beneficiary in such year under section 666 as a result of an accumulation distribution from the same trust in the current year. Under regulations prescribed by the Secretary or his delegate, rules similar to the rules provided by paragraphs (2), (4), and (5) of section 668(b) shall be applied for purposes of this section. “(d) Total Taxes Deemed Distributed.— If any portion of a capital gain distribution for any taxable year is deemed under subsection (a) to be an amount properly paid, credited or required to be distributed on the last day of any preceding taxable year, and such portion of such capital gain distribution is not less than the undistributed capital gain for such preceding taxable year, the trust shall be deemed to have properly distributed on the last day of such preceding taxable year an additional amount. Such additional amount shall be equal to the taxes imposed on the trust for such preceding taxable year attributable to such undistributed capital gain. For purposes of this subsection, the undistributed capital gain and the taxes imposed on the trust for such preceding taxable year attributable to such gain shall be computed without regard to such capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(e) Pro Rata Portion of Taxes Deemed Distributed.— If any portion of a capital gain distribution for any taxable year is deemed under subsection (a) to be an amount properly paid, credited, or required to be distributed on the last day of any preceding taxable year and such portion of the capital gain distribution is less than the undistributed capital gain for such preceding taxable year, the trust shall be deemed to have properly distributed on the last day of such preceding taxable year an additional amount. Such additional amount shall be equal to the taxes imposed on the trust for such taxable year attributable to such undistributed capital gain multiplied by the ratio of the portion of the capital gain distribution to the undistributed capital gain of the trust for such year. For purposes of this subsection the undistributed capital gain and the taxes imposed on the trust for such preceding taxable year attributable to such gain shall be computed without regard to the capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(f) Character of Capital Gain.— For purposes of this section, the character of the capital gain of a trust for any taxable year with respect to a beneficiary shall be the same as it was with respect to the trust.”

6. 1969

   Tax Reform Act of 1969

   Pub. L. 91–172 title III § 331(a) · 83 Stat. 487

   Added · 26 U.S.C. § 666(d)

   Pub. L. 91–172 added subsec. (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 91–172 added subsec. (d).

   Enacted provision · exact public law section
   (a) In General.— Subpart D of part I of subchapter J of chapter 68A Stat. 223; 76 Stat. 986. 1 is amended to read as follows: SUBPART D— TREATMENT OF EXCESS DISTRIBUTIONS BY TRUSTS “Sec. 665. Definitions applicable to subpart D. “Sec. 666. Accumulation distribution allocated to preceding years. “Sec. 667. Denial of refund to trusts; authorization of credit to beneficiaries. “Sec. 668. Treatment of amounts deemed distributed in preceding years. “Sec. 669. Treatment of capital gain deemed distributed in preceding years. SEC. 665. DEFINITIONS APPLICABLE TO SUBPART D. “(a) Undistributed Net Income.— For purposes of this subpart the term ‘undistributed net income’ for any taxable year means the amount by which the distributable net income of the trust for such taxable year exceeds the sum of— “(1) the amounts for such taxable year specified in paragraphs 68A Stat. 220. 26 USC 661. (1) and (2) of section 661 (a), and “(2) the amount of taxes imposed on the trust attributable to such distributable net income. “(b) Accumulation Distribution.— For purposes of this subpart, the term ‘accumulation distribution’ means, for any taxable year of the trust, the amount by which— “(1) the amounts specified in paragraph (2) of section 661(a) for such taxable year, exceed “(2) distributable net income for such year reduced (but not below zero) by the amounts specified in paragraph (1) of section 661(a). “(c) Special Rule Applicable to Distributions by Certain Foreign Trusts.— For purposes of this subpart, any amount paid to a United States person which is from a payor who is not a United States person and which is derived directly or indirectly from a foreign trust created by a United States person shall be deemed in the year of payment to have been directly paid by the foreign trust. “(d) Taxes Imposed on the Trust.— For purposes of this subpart, the term ‘taxes imposed on the trust’ means the amount of the taxes which are imposed for any taxable year of the trust under this chapter (without regard to this subpart) and which, under regulations prescribed by the Secretary or his delegate, are properly allocable to the undistributed portions of distributable net income and gains in excess of losses from sales or exchanges of capital assets. The amount determined in the preceding sentence shall be reduced by any amount of such taxes deemed distributed under section 666 (b) and (c) or 669 (d) and (e) to any beneficiary. “(e) Preceding Taxable Year.— For purposes of this subpart— “(1) in the case of a trust (other than a foreign trust created by a United States person), the term ‘preceding taxable year’ does not include any taxable year of the trust— “(A) which precedes by more than 5 years the taxable year of the trust in which an accumulation distribution is made, if it is made in a taxable year beginning before January 1, 1974, “(B) which begins before January 1, 1969, in the case of an accumulation distribution made during a taxable year beginning after December 31, 1973, or “(C) which begins before January 1, 1969, in the case of a capital gain distribution made during a taxable year beginning after December 31, 1968; and “(2) in the case of a foreign trust created by a United States person, such term does not include any taxable year of the trust to which this part does not apply. In the case of a preceding taxable year with respect to which a trust qualifies (without regard to this subpart) under the provisions of subpart B, for purposes of the application of this subpart to such trust for such taxable year, such trust shall, in accordance with regulations prescribed by the Secretary or his delegate, be treated as a trust to which subpart C applies. “(f) Undistributed Capital Gain.— For purposes of this subpart, the term ‘undistributed capital gain’ means, for any taxable year of the trust beginning after December 31, 1968, the amount by which— “(1) gains in excess of losses from the sale or exchange of capital assets, 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 such taxable year, or (B) paid, permanently set aside, or used for the purposes specified in section 642(c), Ante, p. 558. exceed “(2) the amount of taxes imposed on the trust attributable to such gains. For purposes of paragraph (1), the deduction under section 1202 68A Stat. 320. 26 USC 1202. (relating to deduction for excess of capital gains over capital losses) shall not be taken into account. “(g) Capital Gain Distribution.— For purposes of this subpart, the term ‘capital gain distribution’ for any taxable year of the trust means, to the extent of undistributed capital gain for such taxable year, that portion of— “(1) the excess of the amounts specified in paragraph (2) of section 661(a) for such taxable year over distributable net income for such year reduced (but not below zero) by the amounts specified in paragraph (1) of section 661(a), over “(2) the undistributed net income of the trust for all preceding taxable years. “SEC. 666. ACCUMULATION DISTRIBUTION ALLOCATED TO PRECEDING YEARS. “(a) Amount Allocated.— In the case of a trust which is subject to subpart C, the amount of the accumulation distribution of such trust for a taxable year shall be deemed to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of each of the preceding taxable years, commencing with the earliest of such years, to the extent that such amount exceeds the total of any undistributed net income for all earlier preceding taxable years. The amount deemed to be distributed in any such preceding taxable year under the preceding sentence shall not exceed the undistributed net income for such preceding taxable year. For purposes of this subsection, undistributed net income for each of such preceding taxable years shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(b) Total Taxes Deemed Distributed.— If any portion of an accumulation distribution for any taxable year is deemed under subsection (a) to be an amount within the meaning of paragraph (2) 68A Stat. 220. 26 USC 661. 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 imposed on the trust for such preceding taxable year attributable to the undistributed net income. For purposes of this subsection the undistributed net income and the taxes imposed on the trust for such preceding taxable year attributable to such undistributed net income shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(c) Pro Rata Portion of Taxes Deemed Distributed.— If any portion of an accumulation distribution for any taxable year is deemed under subsection (a) to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of any preceding taxable year and such portion of the accumulation distribution is less than the undistributed net income for such preceding taxable year, the trust shall be deemed to have distributed on the last day of such preceding taxable year an additional amount within the meaning of paragraph (2) of section 661(a). Such additional amount shall be equal to the taxes imposed on the trust for such taxable year attributable to the undistributed net income multiplied by the ratio of the portion of the accumulation distribution to the undistributed net income of the trust for such year. For purposes of this subsection, the undistributed net income and the taxes imposed on the trust for such preceding taxable year attributable to such undistributed net income shall be computed without regard to the accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. “(d) Rule When Information Is Not Available.— If adequate records are not available to determine the proper application of this subpart to an amount distributed by a trust, such amount shall be deemed to be an accumulation distribution consisting of undistributed net income earned during the earliest preceding taxable year of the trust in which it can be established that the trust was in existence. “SEC. 667. DENIAL OF REFUND TO TRUSTS; AUTHORIZATION OF CREDIT TO BENEFICIARIES. “(a) Denial of Refund to Trusts.— No refund or credit shall be allowed to a trust for any preceding taxable year by reason of a distribution deemed to have been made by such trust in such year under section 666 or 669. “(b) Authorization of Credit to Beneficiary.— There shall be allowed as a credit (without interest) against the tax imposed by this subtitle on the beneficiary an amount equal to the amount of the taxes deemed distributed to such beneficiary by the trust under sections 666 (b) and (c) and 669 (d) and (e) during preceding taxable years of the trust on the last day of which the beneficiary was in being, reduced by the amount of the taxes deemed distributed to such beneficiary for such preceding taxable years to the extent that such taxes are taken into account under sections 668(b)(1) and 669(b) in determining the amount of the tax imposed by section 668. “SEC. 668. TREATMENT OF AMOUNTS DEEMED DISTRIBUTED IN PRECEDING YEARS. “(a) General Rule.— The total of the amounts which are treated under sections 666 and 669 as having been distributed by the trust in a preceding taxable year shall be included in the income of a beneficiary of the trust when paid, credited, or required to be distributed to the extent that such total would have been included in the income of such beneficiary under section 662(a)(2) and (b) if such total had been 68A Stat. 220. 26 USC 662. paid to such beneficiary on the last day of such preceding taxable year. The tax imposed by this subtitle on a beneficiary for a taxable year in which any such amount is included in his income shall be determined only as provided in this section and shall consist of the sum of— “(1) a partial tax computed on the taxable income reduced by an amount equal to the total of such amounts, at the rate and in the manner as if this section had not been enacted, “(2) a partial tax determined as provided in subsection (b) of this section, and “(3) in the case of a beneficiary of a trust which is not required to distribute all of its income currently, a partial tax determined as provided in section 669. For purposes of this subpart, a trust shall not be considered to be a trust which is not required to distribute all of its income currently for any taxable year prior to the first taxable year in which income is accumulated. “(b) Tax on Distribution.— “(1) Alternative methods.— Except as provided in paragraph (2), the partial tax imposed by subsection (a)(2) shall be the lesser of— “(A) the aggregate of the taxes attributable to the amounts deemed distributed under section 666 had they been included in the gross income of the beneficiary on the last day of each respective preceding taxable year, or “(B) the tax determined by multiplying, by the number of preceding taxable years of the trust, on the last day of which an amount is deemed under section 666(a) to have been distributed, the average of the increase in tax attributable to recomputing the beneficiary’s gross income for each of the beneficiary’s 3 taxable years immediately preceding the year of the accumulation distribution by adding to the income of each of such years an amount determined by dividing the amount deemed distributed under section 666 and required to be included in income under subsection (a) by such number of preceding taxable years of the trust, less an amount equal to the amount of taxes deemed distributed to the beneficiary under sections 666 (b) and (c). “(2) Special rules.— “(A) If a beneficiary was not in existence on the last day of a preceding taxable year of the trust with respect to which a distribution is deemed made under section 666(a), the partial tax under either paragraph (1)(A) or (1)(B) shall be computed as if the beneficiary were in existence on the last day of such year on the basis that the beneficiary had no gross income (other than amounts deemed distributed to him under sections 666 and 669 by the same or other trusts) and no deductions for such year. “(B) The partial tax shall not be computed under the provisions of subparagraph (B) of paragraph (1) if, in the same prior taxable year of the beneficiary in which any part of the accumulation distribution is deemed under section 666(a) to have been distributed to such beneficiary, some part of prior accumulation distributions by each of two or more other trusts is deemed under section 666(a) to have been distributed to such beneficiary. “(C) If the partial tax is computed under paragraph (1)(B), and the amount of the undistributed net income deemed distributed in any preceding taxable year of the trust is less than 25 percent of the amount of the accumulation distribution divided by the number of preceding taxable years to which the accumulation distribution is allocated under section 666(a), the number of preceding taxable years of the trust with respect to which an amount is deemed distributed to a beneficiary under section 666(a) shall be determined without regard to such year. “(3) Effect of other accumulation distributions and capital gain distributions.— In computing the partial tax under paragraph (1) for any beneficiary, the income of such beneficiary for each of his prior taxable years— “(A) shall include amounts previously deemed distributed to such beneficiary in such year under section 666 or 669 as a result of prior accumulation distributions or capital gain distributions (whether from the same or another trust), and “(B) shall not include amounts deemed distributed to such beneficiary in such year under section 669 as a result of a capital gain distribution from the same trust in the current year. “(4) Multiple distributions in the same taxable tear.— In the case of accumulation distributions made from more than one trust which are includible in the income of a beneficiary in the same taxable year, the distributions shall be deemed to have been made consecutively in whichever order the beneficiary shall determine. “(5) Information requirements with respect to beneficiary.— “(A) Except as provided in subparagraph (B), the partial tax shall not be computed under the provisions of paragraph (1)(A) unless the beneficiary supplies such information with respect to his income, for each taxable year with which or in which ends a taxable year of the trust on the last day of which an amount is deemed distributed under section 666(a), as the Secretary or his delegate prescribes by regulations. “(B) If by reason of paragraph (2)(B) the provisions of paragraph (1)(B) do not apply, the determination of the amount of the beneficiary’s income for a taxable year for which the beneficiary has not supplied the information required under subparagraph (A) shall be made by the Secretary or his delegate on the basis of information available to him. “SEC. 669. TREATMENT OF CAPITAL GAIN DEEMED DISTRIBUTED IN PRECEDING YEARS. “(a) Amount Allocated.— In the case of a trust which is not required to distribute all of its income currently, the amount of a capital gain distribution of such trust for a taxable year shall be deemed to be an amount properly paid, credited, or required to be 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 capital gain 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 capital gain for such preceding taxable year. For purposes of this subsection, undistributed capital gain for each of such preceding taxable years shall be computed without regard to such capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(b) Tax on Distribution.— The partial tax imposed by section 668 (a)(3) shall be the lesser of— “(1) the aggregate of the taxes attributable to the amounts deemed distributed under this section, had such amounts been included in the gross income of the beneficiary on the last day of each respective preceding taxable year, or “(2) the tax determined by multiplying by the number of preceding taxable years of the trust, on the last day of which net gains from the sale or exchange of capital assets are deemed under subsection (a) to have been distributed, the average of the increase in tax attributable to recomputing the beneficiary’s gross income for each of the beneficiary’s 3 taxable years immediately preceding the year of the capital gain distribution by adding to the income of each of such years an amount determined by dividing the total of the amounts deemed distributed under this section and required to be included in income under section 668(a) by such number of preceding taxable years of the trust, less an amount equal to the amount of taxes deemed distributed to the beneficiary under subsections (d) and (e) which are attributable to the capital gain distribution. “(c) Effect of Other Distributions; Special Rules, Etc.— In computing the partial tax under subsection (b) for any beneficiary, the income of such beneficiary for each of his prior taxable years— “(1) shall include amounts previously deemed distributed to such beneficiary in such year under section 666 or 669 as a result of prior accumulation distributions or capital gain distributions (whether from the same or another trust), and “(2) shall include amounts deemed distributed to such beneficiary in such year under section 666 as a result of an accumulation distribution from the same trust in the current year. Under regulations prescribed by the Secretary or his delegate, rules similar to the rules provided by paragraphs (2), (4), and (5) of section 668(b) shall be applied for purposes of this section. “(d) Total Taxes Deemed Distributed.— If any portion of a capital gain distribution for any taxable year is deemed under subsection (a) to be an amount properly paid, credited or required to be distributed on the last day of any preceding taxable year, and such portion of such capital gain distribution is not less than the undistributed capital gain for such preceding taxable year, the trust shall be deemed to have properly distributed on the last day of such preceding taxable year an additional amount. Such additional amount shall be equal to the taxes imposed on the trust for such preceding taxable year attributable to such undistributed capital gain. For purposes of this subsection, the undistributed capital gain and the taxes imposed on the trust for such preceding taxable year attributable to such gain shall be computed without regard to such capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(e) Pro Rata Portion of Taxes Deemed Distributed.— If any portion of a capital gain distribution for any taxable year is deemed under subsection (a) to be an amount properly paid, credited, or required to be distributed on the last day of any preceding taxable year and such portion of the capital gain distribution is less than the undistributed capital gain for such preceding taxable year, the trust shall be deemed to have properly distributed on the last day of such preceding taxable year an additional amount. Such additional amount shall be equal to the taxes imposed on the trust for such taxable year attributable to such undistributed capital gain multiplied by the ratio of the portion of the capital gain distribution to the undistributed capital gain of the trust for such year. For purposes of this subsection the undistributed capital gain and the taxes imposed on the trust for such preceding taxable year attributable to such gain shall be computed without regard to the capital gain distribution and without regard to any capital gain distribution determined for any succeeding taxable year. “(f) Character of Capital Gain.— For purposes of this section, the character of the capital gain of a trust for any taxable year with respect to a beneficiary shall be the same as it was with respect to the trust.”

7. 1976

   Pub. L. 94–455 title VII § 701(a)(2) · 90 Stat. 1520

   Added · 26 U.S.C. § 666(e)

   Pub. L. 94–455 added subsec. (e)

   Source evidence

   Code amendment note
   Subsec. (e). Pub. L. 94–455 added subsec. (e).

   Enacted provision · exact public law section
   (2) Section 666 (relating to accumulation distribution allocated 26 USC 666. to preceding years) is amended by adding at the end thereof the following new subsection: “(e) Denial of Refund to Trusts and Beneficiaries.— No refund or credit shall be allowed to a trust or a beneficiary of such trust for any preceding taxable year by reason of a distribution deemed to have been made by such trust in such year under this section.”

8. 1978

   Pub. L. 95–600 title IV § 421(d) · 92 Stat. 2763

   Inserted · 26 U.S.C. § 666(b)

   Pub. L. 95–600 inserted “(other than the tax imposed by section 55)” after “equal to the taxes”

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 95–600 inserted “(other than the tax imposed by section 55)” after “equal to the taxes”.

   Enacted provision · exact public law section
   SEC. 421. ALTERNATIVE MINIMUM TAX FOR TAXPAYERS OTHER THAN CORPORATIONS. (a) In General.— Part VI of subchapter A of chapter 1 (relating to minimum tax for tax preferences) is amended by inserting immediately before section 56 the following new section: “SEC. 55. ALTERNATIVE MINIMUM TAX FOR TAXPAYERS OTHER THAN CORPORATIONS. “(a) Alternative Minimum Tax Imposed.— In the case of a tax-payer other than a corporation, if— “(1) an amount equal to the sum of— “(A) 10 percent of so much of the alternative minimum taxable income as exceeds $20,000 but does not exceed $60,000 plus “(B) 20 percent of so much of the alternative minimum taxable income as exceeds $60,000 but does not exceed $100,000, plus “(C) 25 percent of so much of the alternative minimum taxable income as exceeds $100,000, exceeds “(2) the regular tax for the taxable year, then there is imposed (in addition to all other taxes imposed by this title) a tax equal to the amount of such excess. “(b) Definitions.— For purposes of this section— “(1) Alternative minimum taxable income.— The term ‘alternative minimum taxable income’ means gross income— “(A) reduced by the sum of the deductions allowed for the taxable year, “(B) 26 USC 667. reduced by the sum of any amounts included in income under section 667, and “(C) increased by an amount equal to the sum of the tax preference items for— “(i) adjusted itemized deductions (within the meaning 26 USC 57. of section 57(a)(1)), and “(ii) capital gains (within the meaning of section 57(a)(9)). “(2) Regular tax.— The term ‘regular tax’ means the taxes imposed by this chapter for the taxable year (computed without regard to this section and without regard to the taxes imposed by 26 USC 72, 402, 408, 667. 26 USC 31. 26 USC 31, 39, 43. sections 72(m)(5)(B), 402(e), 408(f), and 667(b)) reduced by the sum of the credits allowable under subpart A of part IV of this subchapter (other than under sections 31,39 and 43). “(c) Credits.— “(1) Credits other than the foreign tax credit not allowable.— For purposes of determining the amount of any credit 26 USC 31. 26 USC 33. allowable under subpart A of part IV of this subchapter (other than the foreign tax credit allowed under section 33(a)), the tax imposed by this section shall not be treated as a tax imposed by this chapter. “(2) Foreign tax credit allowed against alternative minimum tax.— The total amount of the foreign tax credit which can be taken against the tax imposed by subsection (a) shall be 26 USC 901, 903–908. determined under section 901 and sections 903 through 908. For purposes of this determination— “(A) the amount of taxes paid or accrued to foreign countries or possessions of the United States in the taxable year shall be deemed to include an amount equal to the 26 USC 33. lesser of (i) the foreign tax credit allowed under section 33(a) in computing the regular tax for the taxable year, or (ii) the tax imposed under subsection (a); “(B) 26 USC 904. the limitation of section 904(a) shall be an amount equal to the same proportion of the sum of the tax imposed by this section against which such credit is taken and the 26 USC 56. regular tax (excluding the tax imposed by section 56) which the taxpayer’s alternative minimun taxable income from sources without the United States (but not in excess of the taxpayer’s entire alternative minimum taxable income) bears to his entire alternative minimum taxable income for the same taxable year. For purposes of the preceding sentence, the entire alternative minimum taxable income shall be reduced by an amount equal to the zero bracket amount; “(C) the term ‘alternative minimum taxable income from “Alternative minimum taxable income from sources without United States”. sources without United States’ means the excess of the items of gross income from sources without the United States over that portion of the deductions taken into account in computing alternative minimum taxable income which are deducted from those items of gross income in computing taxable income from sources without the United States; for purposes of this subparagraph, and except as provided in section 904, gross and taxable income from sources without the United States shall be determined under part I of subchapter N of chapter 1; and “(D) the amount of foreign taxes paid during the taxable year which may be deemed to be paid in a preceding or succeeding year under section 904(c), the limitation of section 26 USC 904. 904(a) shall be increased by the lesser of (i) the amount described in subparagraph (B) or (ii) the tax imposed under subsection (a). “(3) Carryover and carryback of certain credits.— In any taxable year in which a tax is imposed by this section (referred to as the current taxable year)— “(A) Employment credit.— For purposes of determining under section 53(c) the amount of any jobs credit carryback Ante, p. 2835. or carryover to any other taxable year, the amount of the limitation under section 53(a) for the current taxable year shall be deemed to be— “(i) the amount of the credit allowable under section 44B for the current taxable year without regard to this Ante, p. 2834. subparagraph, reduced by “(ii) the amount equal to the lesser of (I) the amount of the credit allowable under section 44B for the current taxable year without regard to this subparagraph, or (II) the net tax imposed by this section for the current taxable year. “(B) Work incentive program credit.— For purposes of determining under section 50A(b) the amount of any work Ante, p. 2836. incentive program credit carryback or carryover to any other taxable year, the amount of the limitation under section 50A(a)(2) for the current taxable year shall be deemed to be— “(i) the amount of the credit allowable under section 40 for the current taxable year without regard to this 26 USC 40. subparagraph, reduced by “(ii) the amount equal to the lesser of (I) the amount of the credit allowable under section 40 for the current taxable year without regard to this subparagraph, or, (II) the net tax imposed by this section for the current taxable year reduced by the amount of reduction described in clause (ii) of subparagraph (A). “(C) Investment credit.— For purposes of determining under section 46(b) the amount of any investment credit 26 USC 46. carryback or carryover to any other taxable year, the 26 USC 46. amount of the limitation under section 46(a)(3) for the current taxable year shall be deemed to be “(i) the amount of the credit allowable under section 26 USC 38. 38 for the current taxable year without regard to this subparagraph, reduced by “(ii) the amount equal to the lesser of (D the amount of the credit allowable under section 38 for the current taxable year without regard to this subparagraph, or (II) the net tax imposed by this section for the current taxable year reduced by the sum of the amounts of reduction described in clause (ii) of subparagraphs (A) and (B). “(D) Net tax imposed by this section.— For purposes of this paragraph, the term ‘net tax imposed by this section’ means the tax imposed by this section reduced by the foreign 26 USC 33. tax credit allowed under section 33 (a), as modified by paragraph (2). (b) 26 USC 57. Amendment of Section 57.— Section 57 (relating to items of tax preference) is amended— (1) by adding the following at the end of paragraph (9) subsection (a): “(D) Principal residence.— For purposes of subparagraph (A), gain from the sale or exchange of a principal residence 26 USC 1034. (within the meaning of section 1034) shall not be taken into account.”, (2) by striking out the last sentence of subsection (a) and inserting in lieu thereof the following: “Paragraphs (3) and (11) shall not apply to a corporation other than an electing small 26 USC 1371. 26 USC 542. 26 USC 56. business corporation (as defined in section 1371 (b)) and a personal holding company (as defined in section 542). For purposes of section 56, in the case of a taxpayer other than a corporation, the adjusted itemized deductions described in paragraph (1) and capital gains described in paragraph (9) shall not be treated as items of tax preference.” (3) by striking out subsection (b)(1) and inserting the following in lieu thereof: “(1) In general.— For purposes of paragraph (1) of subsection (a), the amount of the adjusted itemized deductions for any taxable year is the amount by which the sum of the itemized 26 USC 63. deductions (as defined in section 63(f)) other than— “(A) the deduction for State and local taxes provided by 26 USC 164. section 164(a), “(B) the deduction for medical, dental, etc., expenses 26 USC 213. provided by section 213, “(C) the deduction for casualty losses described in section 26 USC 165. 165(c)(3), and “(D) 26 USC 691. the deduction allowable under section 691(c), exceeds 60 percent of the taxpayer’s adjusted gross income reduced by the items in subparagraphs (A) through (D) for the taxable year.”, and (4) by striking out subparagraph (A) of subsection (b)(2), as Post, p. 2897. amended by section 701 of this Act, and inserting in lieu thereof the following: “(A) In general.— In the case of an estate or trust, for purposes of paragraph (1) of subsection (a), the amount of the adjusted itemized deductions for any taxable year is the amount by which the sum of the deductions for the taxable year other than— “(i) the deductions allowable in arriving at adjusted gross income, “(ii) the deduction for personal exemption provided by section 642(b), 26 USC 642. “(iii) the deduction for casualty losses described in section 165(c)(3), 26 USC 165. “(iv) the deductions allowable under section 651(a), 661(a), or 691(c), 26 USC 651, 661, 691. “(v) the deduction for State and local taxes provided by section 164(a), and “(vi) the deductions allowable to a trust under section 642(c) to the extent that a corresponding amount is 26 USC 642. included in the gross income of the beneficiary under section 662(a)(1) for the taxable year of the beneficiary 26 USC 662. with which or within which the taxable year of the trust ends, exceeds 60 percent of the adjusted gross income reduced by the items in clauses (i) through (vi) for the taxable year.” (c) Amendments of Section 58.— Section 58 (relating to rules for 26 USC 58. application of part) is amended— (1) by adding at the end of subsection (a) the following new sentence: “In the case of a married individual who files a separate return for the taxable year, the amount determined under paragraph (1) of section 55(a) shall be an amount equal to 26 USC 55. one-half of the amount which would be determined under such paragraph if the amount of the individual’s alternative minimum taxable income were multiplied by 2.”; (2) by amending subsection (c) to read as follows: “(c) Estates and Trusts.— In the case of an estate or trust— “(1) the sum of the items of tax preference for any taxable year of the estate or trust shall be apportioned between the estate or trust and the beneficiaries on the basis of the income of the estate or trust allocable to each, “(2) the $10,000 amount specified in section 56 applicable to 26 USC 56. such estate or trust shall be reduced to an amount which bears the same ratio to $10,000 as the portion of the sum of the items of tax preference allocated to the estate or trust under paragraph (1) bears to such sum, and “(3) the liability for the tax imposed by section 55 (a) shall be determined as in the case of a married individual filing separately.”, and (3) by deleting subsection (i) (relating to the definition of corporation). (d) Taxes Taken Into Account in Case of Accumulation Distributions by Trusts.— The second sentence of section 666(b) (relating 26 USC 666. to total taxes deemed distributed) is amended by striking out “taxes” and inserting in lieu thereof “taxes (other than the tax imposed by section 55)”. (e) Technical Amendments.— (1) Paragraph (4) of section (5)(a) (as redesignated by section 401 26 USC 5. of this Act) (relating to cross references relating to tax on individuals) is amended to read as follows: “(4) For minimum tax for taxpayers other than corporations, see section 55.”. (2) 26 USC 443. Subsection (d) of section 443 (relating to adjustment in computing minimum tax for short periods) is amended to read as follows: “(d) Adjustment in Computing Minimum Tax for Tax Preferences.— If a return is made for a short period by reason of subsection (a), then— “(1) in the case of a taxpayer other than a corporation, the alternative minimum taxable income for the short period shall be placed on an annual basis by multiplying that amount by 12 and dividing the result by the number of months in the short period, and the amount computed under paragraph (1) of section 26 USC 55. 55(a) shall be the same part of the tax computed on the annual basis as the number of months in the short period is of 12 months; and “(2) in the case of a corporation, the $10,000 amount specified 26 USC 56. 26 USC 58. in section 56 (relating to minimum tax for tax preferences), modified as provided by section 58, shall be reduced to the amount which bears the same ratio to such specified amount as the number of days in the short period bears to 365.”. (3) 26 USC 511. Subsection (d) of section 511 (relating to tax preferences) is amended to read as follows: “(d) Tax Preferences.— “(1) Organizations taxable at corporate rates.— If an organization is subject to tax on unrelated business taxable income 26 USC 56. pursuant to subsection (a), the tax imposed by section 56 shall apply to such organizations with respect to items of tax preference which enter into the computation of unrelated business taxable income in the same manner as section 56 applies to corporations. “(2) Organizations taxable as trusts.— If an organization is subject to tax on unrelated business taxable income pursuant to subsection (b), the taxes imposed by section 55 and section 56 (as the case may be) shall apply to such organization with respect to items of tax preference which enter into the computation of unrelated business taxable income.” (4) 26 USC 871. Paragraph (1) of section 871(b) (relating to tax on nonresident alien individuals) is amended by inserting “, section 55,” after “section 1”. (5) 26 USC 877. Subsection (b) of section 877 (relating to expatriation to avoid tax) is amended by inserting “, section 55,” after “section 1”. (6) 26 USC 904. Section 904(h) (relating to cross references) is amended to read as follows: “(h) Cross References.— “(1) For increase of limitation under subsection (a) for taxes paid with respect to amounts received which were included in the gross income of the taxpayer for a prior taxable year as a United States shareholder with respect to a controlled foreign corporation, see section 960(b). “(2) For modification of limitation under subsection (a) for purposes of determining the amount of credit which can be taken by an individual against the alternative minimum tax, see section 55(c).”. (7) 26 USC 6015. Paragraph (1) of section 6015(c) (defining estimated tax) is amended by striking out “section 56” and inserting in lieu thereof “section 55 or 56”. (8) Subparagraph (A) of section 6362(b) (relating to qualified 26 USC 6362. individual income taxes) is amended by striking out “section 56” and inserting in lieu thereof “section 55 or 56”. (9) Paragraph (1) of section 6654(f) (relating to tax computed 26 USC 6654. after applications of credit against tax) is amended by striking out “section 56” and inserting in lieu thereof “section 55 or 56”. (f) Clerical Amendment.— The table of sections for part VI of subchapter A of chapter 1 is amended by adding at the beginning thereof the following new item: “Sec. 55. Alternative Minimum Tax for Taxpayers other than Corporations.”. (g) Effective Date.— The amendments made by this section shall 26 USC 55 note. apply to taxable years beginning after December 31, 1978, except that the amendment made by paragraph (1) of subsection (b) shall apply to sales and exchanges made after July 26, 1978, in taxable years ending after such date.

   Effective date note
   Amendment by Pub. L. 96–222 effective, except as otherwise provided, as if it had been included in the provisions of the Revenue Act of 1978, Pub. L. 95–600, to which such amendment relates, see section 201 of Pub. L. 96–222, set out as a note under section 32 of this title.

9. 1980

   Technical Corrections Act of 1979

   Pub. L. 96–222 title I § 104(a)(4)(H)(vi) · 94 Stat. 194

   Inserted · 26 U.S.C. § 666(c)

   Pub. L. 96–222 inserted “(other than the tax imposed by section 55)” after “equal to the taxes”

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 96–222 inserted “(other than the tax imposed by section 55)” after “equal to the taxes”.

   Enacted provision · exact public law section
   (vi) The second sentence of section 666(c) (relating to pro rata portion of taxes deemed distributed) is amended by inserting “(other than the tax imposed by section 55)” after “equal to the taxes”.

   Effective date note
   Amendment by Pub. L. 96–222 effective, except as otherwise provided, as if it had been included in the provisions of the Revenue Act of 1978, Pub. L. 95–600, to which such amendment relates, see section 201 of Pub. L. 96–222, set out as a note under section 32 of this title.

14 of 15 references resolved to an enrolled provision · 1 partial