§ 685. Treatment of funeral trusts

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. 1997

   Pub. L. 105–34 title XIII § 1309(a) · 111 Stat. 788

   Enacted · 26 U.S.C. § 685

   Added Pub. L. 105–34, title XIII, § 1309(a), Aug. 5, 1997, 111 Stat. 1042

   Source evidence

   Code source credit
   Added Pub. L. 105–34, title XIII, § 1309(a), Aug. 5, 1997, 111 Stat. 1042

   Enacted provision · exact public law section
   (a) In General.— Subpart F of part I of subchapter J of chapter 1 is amended by adding at the end the following new section: “SEC. 685. TREATMENT OF FUNERAL TRUSTS. “(a) In General.— In the case of a qualified funeral trust— “(1) subparts B, C, D, and E shall not apply, and “(2) no deduction shall be allowed by section 642(b). “(b) Qualified Funeral Trust.— For purposes of this subsection, the term ‘qualified funeral trust’ means any trust (other than a foreign trust) if— “(1) the trust arises as a result of a contract with a person engaged in the trade or business of providing funeral or burial services or property necessary to provide such services, “(2) the sole purpose of the trust is to hold, invest, and reinvest funds in the trust and to use such funds solely to make payments for such services or property for the benefit of the beneficiaries of the trust, “(3) the only beneficiaries of such trust are individuals with respect to whom such services or property are to be provided at their death under contracts described in paragraph (1), “(4) the only contributions to the trust are contributions by or for the benefit of such beneficiaries, “(5) the trustee elects the application of this subsection, and “(6) the trust would (but for the election described in paragraph (5)) be treated as owned under subpart E by the purchasers of the contracts described in paragraph (1). “(c) Dollar Limitation on Contributions.— “(1) In general.— The term ‘qualified funeral trust’ shall not include any trust which accepts aggregate contributions by or for the benefit of an individual in excess of $7,000. “(2) Related trusts.— For purposes of paragraph (1), all trusts having trustees which are related persons shall be treated as 1 trust. For purposes of the preceding sentence, persons are related if— “(A) the relationship between such persons is described in section 267 or 707(b), “(B) such persons are treated as a single employer under subsection (a) or (b) of section 52, or “(C) the Secretary determines that treating such persons as related is necessary to prevent avoidance of the purposes of this section. “(3) Inflation adjustment.— In the case of any contract referred to in subsection (b)(1) which is entered into during any calendar year after 1998, the dollar amount referred to paragraph (1) shall be increased by an amount equal to— “(A) such dollar amount, multiplied by “(B) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year, by substituting ‘calendar year 1997’ for ‘calendar year 1992’ in subparagraph (B) thereof. If any dollar amount after being increased under the preceding sentence is not a multiple of $100, such dollar amount shall be rounded to the nearest multiple of $100. “(d) Application of Rate Schedule.— Section 1(e) shall be applied to each qualified funeral trust by treating each beneficiary’s interest in each such trust as a separate trust. “(e) Treatment of Amounts Refunded to Purchaser on Cancellation.— No gain or loss shall be recognized to a purchaser of a contract described in subsection (b)(1) by reason of any payment from such trust to such purchaser by reason of cancellation of such contract. If any payment referred to in the preceding sentence consists of property other than money, the basis of such property in the hands of such purchaser shall be the same as the trust’s basis in such property immediately before the payment. “(f) Simplified Reporting.— The Secretary may prescribe rules for simplified reporting of all trusts having a single trustee.”.

2. 1998

   Internal Revenue Service Restructuring and Reform Act of 1998

   Pub. L. 105–206 § 6013(b)(1) · 112 Stat. 685

   Inserted · 26 U.S.C. § 685(b)

   Pub. L. 105–206, § 6013(b)(1), inserted concluding provisions

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 105–206, § 6013(b)(1), inserted concluding provisions.

   Enacted provision · exact public law section
   (1) Subsection (b) of section 685 of the 1986 Code is amended by adding at the end the following new flush sentence: “A trust shall not fail to be treated as meeting the requirement of paragraph (6) by reason of the death of an individual but only during the 60-day period beginning on the date of such death.”.

3. 1998

   Internal Revenue Service Restructuring and Reform Act of 1998

   Pub. L. 105–206 § 6013(b)(2) · 112 Stat. 685

   Inserted · 26 U.S.C. § 685(f)

   Pub. L. 105–206, § 6013(b)(2), inserted “and of trusts terminated during the year” before period at end

   Source evidence

   Code amendment note
   Subsec. (f). Pub. L. 105–206, § 6013(b)(2), inserted “and of trusts terminated during the year” before period at end.

   Enacted provision · exact public law section
   (2) Subsection (f) of section 685 of the 1986 Code is amended by inserting before the period at the end “and of trusts terminated during the year”.

4. 2008

   Hubbard Act

   Pub. L. 110–317 § 9(a) · 122 Stat. 3526

   1. Redesignated · 26 U.S.C. § 685(c)(f)

      Pub. L. 110–317 redesignated subsecs. (d) to (f) as (c) to (e), respectively

   2. Struck · 26 U.S.C. § 685(c)(f)

      Pub. L. 110–317 struck out former subsec. (c), which related to dollar limitation on contributions to qualified funeral trusts

   Source evidence

   Code amendment note
   Subsecs. (c) to (f). Pub. L. 110–317 redesignated subsecs. (d) to (f) as (c) to (e), respectively, and struck out former subsec. (c), which related to dollar limitation on contributions to qualified funeral trusts.

   Enacted provision · exact public law section
   (a) In General.— Subsection (c) of section 685 of the Internal Revenue Code of 1986 26 USC 685. (relating to treatment of funeral trusts) is repealed.

   Effective date note
   Pub. L. 110–317, § 9(c), Aug. 29, 2008, 122 Stat. 3530, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Aug. 29, 2008].”

5 of 5 references resolved to an enrolled provision