Subpart A—General Rules for Taxation of Estates and Trusts
Amendments
1986—
1976—
Subpart Referred to in Other Sections
This subpart is referred to in
§641. Imposition of tax
(a) Application of tax
The tax imposed by section 1(e) shall apply to the taxable income of estates or of any kind of property held in trust, including—
(1) income accumulated in trust for the benefit of unborn or unascertained persons or persons with contingent interests, and income accumulated or held for future distribution under the terms of the will or trust;
(2) income which is to be distributed currently by the fiduciary to the beneficiaries, and income collected by a guardian of an infant which is to be held or distributed as the court may direct;
(3) income received by estates of deceased persons during the period of administration or settlement of the estate; and
(4) income which, in the discretion of the fiduciary, may be either distributed to the beneficiaries or accumulated.
(b) Computation and payment
The taxable income of an estate or trust shall be computed in the same manner as in the case of an individual, except as otherwise provided in this part. The tax shall be computed on such taxable income and shall be paid by the fiduciary.
(c) Exclusion of includible gain from taxable income
(1) General rule
For purposes of this part, the taxable income of a trust does not include the amount of any includible gain as defined in section 644(b) reduced by any deductions properly allocable thereto.
(2) Cross reference
For the taxation of any includible gain, see section 644.
(Aug. 16, 1954, ch. 736,
Amendments
1977—Subsec. (a).
1976—Subsec. (c).
1969—Subsec. (a).
Effective Date of 1977 Amendment
Amendment by
Effective Date of 1976 Amendment
Amendment by
Effective Date of 1969 Amendment
Amendment by
Cross References
Charitable trusts subject to tax, see
Income from an interest in an estate or trust as gross income, see
Rates of tax on individuals, see
Returns—
Estates and trusts, see
Joint fiduciaries, see
Taxable income defined, see
§642. Special rules for credits and deductions
(a) Foreign tax credit allowed
An estate or trust shall be allowed the credit against tax for taxes imposed by foreign countries and possessions of the United States, to the extent allowed by section 901, only in respect of so much of the taxes described in such section as is not properly allocable under such section to the beneficiaries.
(b) Deduction for personal exemption
An estate shall be allowed a deduction of $600. A trust which, under its governing instrument, is required to distribute all of its income currently shall be allowed a deduction of $300. All other trusts shall be allowed a deduction of $100. The deductions allowed by this subsection shall be in lieu of the deductions allowed under section 151 (relating to deduction for personal exemption).
(c) Deduction for amounts paid or permanently set aside for a charitable purpose
(1) General rule
In the case of an estate or trust (other then 1 a trust meeting the specifications of subpart B), there shall be allowed as a deduction in computing its taxable income (in lieu of the deduction allowed by section 170(a), relating to deduction for charitable, etc., contributions and gifts) any amount of the gross income, without limitation, which pursuant to the terms of the governing instrument is, during the taxable year, paid for a purpose specified in section 170(c) (determined without regard to section 170(c)(2)(A)). If a charitable contribution is paid after the close of such taxable year and on or before the last day of the year following the close of such taxable year, then the trustee or administrator may elect to treat such contribution as paid during such taxable year. The election shall be made at such time and in such manner as the Secretary prescribes by regulations.
(2) Amounts permanently set aside
In the case of an estate, and in the case of a trust (other than a trust meeting the specifications of subpart B) required by the terms of its governing instrument to set aside amounts which was—
(A) created on or before October 9, 1969, if—
(i) an irrevocable remainder interest is transferred to or for the use of an organization described in section 170(c), or
(ii) the grantor is at all times after October 9, 1969, under a mental disability to change the terms of the trust; or
(B) established by a will executed on or before October 9, 1969, if—
(i) the testator dies before October 9, 1972, without having republished the will after October 9, 1969, by codicil or otherwise,
(ii) the testator at no time after October 9, 1969, had the right to change the portions of the will which pertain to the trust, or
(iii) the will is not republished by codicil or otherwise before October 9, 1972, and the testator is on such date and at all times thereafter under a mental disability to republish the will by codicil or otherwise,
there shall also be allowed as a deduction in computing its taxable income any amount of the gross income, without limitation, which pursuant to the terms of the governing instrument is, during the taxable year, permanently set aside for a purpose specified in section 170(c), or is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, or for the establishment, acquisition, maintenance, or operation of a public cemetery not operated for profit. In the case of a trust, the preceding sentence shall apply only to gross income earned with respect to amounts transferred to the trust before October 9, 1969, or transferred under a will to which subparagraph (B) applies.
(3) Pooled income funds
In the case of a pooled income fund (as defined in paragraph (5)), there shall also be allowed as a deduction in computing its taxable income any amount of the gross income attributable to gain from the sale of a capital asset held for more than 1 year, without limitation, which pursuant to the terms of the governing instrument is, during the taxable year, permanently set aside for a purpose specified in section 170(c).
(4) Adjustments
To the extent that the amount otherwise allowable as a deduction under this subsection consists of gain described in section 1202(a), proper adjustment shall be made for any exclusion allowable to the estate or trust under section 1202. In the case of a trust, the deduction allowed by this subsection shall be subject to section 681 (relating to unrelated business income).
(5) Definition of pooled income fund
For purposes of paragraph (3), a pooled income fund is a trust—
(A) to which each donor transfers property, contributing an irrevocable remainder interest in such property to or for the use of an organization described in section 170(b)(1)(A) (other than in clauses (vii) or (viii)), and retaining an income interest for the life of one or more beneficiaries (living at the time of such transfer),
(B) in which the property transferred by each donor is commingled with property transferred by other donors who have made or make similar transfers,
(C) which cannot have investments in securities which are exempt from the taxes imposed by this subtitle,
(D) which includes only amounts received from transfers which meet the requirements of this paragraph,
(E) which is maintained by the organization to which the remainder interest is contributed and of which no donor or beneficiary of an income interest is a trustee, and
(F) from which each beneficiary of an income interest receives income, for each year for which he is entitled to receive the income interest referred to in subparagraph (A), determined by the rate of return earned by the trust for such year.
For purposes of determining the amount of any charitable contribution allowable by reason of a transfer of property to a pooled fund, the value of the income interest shall be determined on the basis of the highest rate of return earned by the fund for any of the 3 taxable years immediately preceding the taxable year of the fund in which the transfer is made. In the case of funds in existence less than 3 taxable years preceding the taxable year of the fund in which a transfer is made the rate of return shall be deemed to be 6 percent per annum, except that the Secretary may prescribe a different rate of return.
(6) Taxable private foundations
In the case of a private foundation which is not exempt from taxation under section 501(a) for the taxable year, the provisions of this subsection shall not apply and the provisions of section 170 shall apply.
(d) Net operating loss deduction
The benefit of the deduction for net operating losses provided by section 172 shall be allowed to estates and trusts under regulations prescribed by the Secretary.
(e) Deduction for depreciation and depletion
An estate or trust shall be allowed the deduction for depreciation and depletion only to the extent not allowable to beneficiaries under section 167(d) and 611(b).
(f) Amortization deductions
The benefit of the deductions for amortization provided by sections 169 and 197 shall be allowed to estates and trusts in the same manner as in the case of an individual. The allowable deduction shall be apportioned between the income beneficiaries and the fiduciary under regulations prescribed by the Secretary.
(g) Disallowance of double deductions
Amounts allowable under section 2053 or 2054 as a deduction in computing the taxable estate of a decedent shall not be allowed as a deduction (or as an offset against the sales price of property in determining gain or loss) in computing the taxable income of the estate or of any other person, unless there is filed, within the time and in the manner and form prescribed by the Secretary, a statement that the amounts have not been allowed as deductions under section 2053 or 2054 and a waiver of the right to have such amounts allowed at any time as deductions under section 2053 or 2054. Rules similar to the rules of the preceding sentence shall apply to amounts which may be taken into account under 2 2621(a)(2) or 2622(b). This subsection shall not apply with respect to deductions allowed under part II (relating to income in respect of decedents).
(h) Unused loss carryovers and excess deductions on termination available to beneficiaries
If on the termination of an estate or trust, the estate or trust has—
(1) a net operating loss carryover under section 172 or a capital loss carryover under section 1212, or
(2) for the last taxable year of the estate or trust deductions (other than the deductions allowed under subsections (b) or (c)) in excess of gross income for such year,
then such carryover or such excess shall be allowed as a deduction, in accordance with regulations prescribed by the Secretary, to the beneficiaries succeeding to the property of the estate or trust.
(i) Certain distributions by cemetery perpetual care funds
In the case of a cemetery perpetual care fund which—
(1) was created pursuant to local law by a taxable cemetery corporation for the care and maintenance of cemetery property, and
(2) is treated for the taxable year as a trust for purposes of this subchapter,
any amount distributed by such fund for the care and maintenance of gravesites which have been purchased from the cemetery corporation before the beginning of the taxable year of the trust and with respect to which there is an obligation to furnish care and maintenance shall be considered to be a distribution solely for purposes of sections 651 and 661, but only to the extent that the aggregate amount so distributed during the taxable year does not exceed $5 multiplied by the aggregate number of such gravesites.
(Aug. 16, 1954, ch. 736,
Amendments
1993—Subsec. (c)(4).
Subsec. (f).
1990—Subsec. (e).
Subsec. (f).
1989—Subsec. (g).
1986—Subsec. (a).
Subsec. (c)(4).
Subsec. (j).
1984—Subsec. (a)(2).
Subsec. (c)(3), (4).
1981—Subsec. (f).
1978—Subsecs. (i) to (k).
1977—Subsec. (k).
1976—Subsec. (a).
Subsec. (c)(1).
Subsec. (c)(3), (4).
Subsec. (c)(3), (4).
Subsecs. (c)(5), (d).
Subsec. (f).
Subsec. (g).
Subsec. (h).
Subsecs. (j), (k).
1971—Subsec. (a)(3).
Subsec. (f).
Subsecs. (i), (j).
1969—Subsec. (c).
Subsec. (f).
1966—Subsec. (g).
1964—Subsec. (a)(3).
Subsec. (i).
1962—Subsec. (e).
Effective Date of 1993 Amendment
Amendment by section 13113(d)(2) of
Amendment by section 13261(f)(2) of
Effective Date of 1990 Amendment
Amendment by section 11812(b)(9) of
Effective Date of 1989 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by section 112(b)(2) of
Amendment by section 301(b)(6) of
Amendment by section 612(b)(3) of
Effective Date of 1984 Amendment
Amendment by section 474(r)(17) of
Amendment by section 1001(b)(8) of
Effective Date of 1981 Amendment
Amendment by
Effective Date of 1978 Amendment
Section 113(d) of
Effective Date of 1977 Amendment
Amendment by
Effective Date of 1976 Amendments
Section 1402(b)(1) of
Section 1402(b)(2) of
Amendment by section 1901(b)(1)(H)(i) of
Amendment by section 1951(c)(2)(B) of
Section 2009(e)(4) of
Section 2124(a)(4) of
Section 1(b) of
Effective Date of 1971 Amendment
Section 303(d) of
Section 703 of
Effective Date of 1969 Amendment
Amendment by section 201(b) of
Amendment by section 704(b)(2) of
Effective Date of 1966 Amendment
Section 2(b) of
Effective Date of 1964 Amendment
Amendment by
Effective Date of 1962 Amendment
Amendment by
Savings Provision
For provisions that nothing in amendment by
Cross References
Deductions—
Estates and trusts accumulating income or distributing corpus, see
Trusts distributing current income only, see
Value of gross estate, see
Limitation on charitable deductions, see
Returns by trust claiming charitable deduction under subsection (c) of this section, see
Section Referred to in Other Sections
This section is referred to in
1 So in original. Probably should be "than".
2 So in original. Probably should be "under section".
§643. Definitions applicable to subparts A, B, C, and D
(a) Distributable net income
For purposes of this part, the term "distributable net income" means, with respect to any taxable year, the taxable income of the estate or trust computed with the following modifications—
(1) Deduction for distributions
No deduction shall be taken under sections 651 and 661 (relating to additional deductions).
(2) Deduction for personal exemption
No deduction shall be taken under section 642(b) (relating to deduction for personal exemptions).
(3) Capital gains and losses
Gains from the sale or exchange of capital assets shall be excluded to the extent that such gains are allocated to corpus and are not (A) paid, credited, or required to be distributed to any beneficiary during the taxable year, or (B) paid, permanently set aside, or to be used for the purposes specified in section 642(c). Losses from the sale or exchange of capital assets shall be excluded, except to the extent such losses are taken into account in determining the amount of gains from the sale or exchange of capital assets which are paid, credited, or required to be distributed to any beneficiary during the taxable year. The exclusion under section 1202 shall not be taken into account.
(4) Extraordinary dividends and taxable stock dividends
For purposes only of subpart B (relating to trusts which distribute current income only), there shall be excluded those items of gross income constituting extraordinary dividends or taxable stock dividends which the fiduciary, acting in good faith, does not pay or credit to any beneficiary by reason of his determination that such dividends are allocable to corpus under the terms of the governing instrument and applicable local law.
(5) Tax-exempt interest
There shall be included any tax-exempt interest to which section 103 applies, reduced by any amounts which would be deductible in respect of disbursements allocable to such interest but for the provisions of section 265 (relating to disallowance of certain deductions).
(6) Income of foreign trust
In the case of a foreign trust—
(A) There shall be included the amounts of gross income from sources without the United States, reduced by any amounts which would be deductible in respect of disbursements allocable to such income but for the provisions of section 265(a)(1) (relating to disallowance of certain deductions).
(B) Gross income from sources within the United States shall be determined without regard to section 894 (relating to income exempt under treaty).
(C) Paragraph (3) shall not apply to a foreign trust. In the case of such a trust, there shall be included gains from the sale or exchange of capital assets, reduced by losses from such sales or exchanges to the extent such losses do not exceed gains from such sales or exchanges.
If the estate or trust is allowed a deduction under section 642(c), the amount of the modifications specified in paragraphs (5) and (6) shall be reduced to the extent that the amount of income which is paid, permanently set aside, or to be used for the purposes specified in section 642(c) is deemed to consist of items specified in those paragraphs. For this purpose, such amount shall (in the absence of specific provisions in the governing instrument) be deemed to consist of the same proportion of each class of items of income of the estate or trust as the total of each class bears to the total of all classes.
(b) Income
For purposes of this subpart and subparts B, C, and D, the term "income", when not preceded by the words "taxable", "distributable net", "undistributed net", or "gross", means the amount of income of the estate or trust for the taxable year determined under the terms of the governing instrument and applicable local law. Items of gross income constituting extraordinary dividends or taxable stock dividends which the fiduciary, acting in good faith, determines to be allocable to corpus under the terms of the governing instrument and applicable local law shall not be considered income.
(c) Beneficiary
For purposes of this part, the term "beneficiary" includes heir, legatee, devisee.
(d) Coordination with back-up withholding
Except to the extent otherwise provided in regulations, this subchapter shall be applied with respect to payments subject to withholding under section 3406—
(1) by allocating between the estate or trust and its beneficiaries any credit allowable under section 31(c) (on the basis of their respective shares of any such payment taken into account under this subchapter),
(2) by treating each beneficiary to whom such credit is allocated as if an amount equal to such credit has been paid to him by the estate or trust, and
(3) by allowing the estate or trust a deduction in an amount equal to the credit so allocated to beneficiaries.
(e) Treatment of property distributed in kind
(1) Basis of beneficiary
The basis of any property received by a beneficiary in a distribution from an estate or trust shall be—
(A) the adjusted basis of such property in the hands of the estate or trust immediately before the distribution, adjusted for
(B) any gain or loss recognized to the estate or trust on the distribution.
(2) Amount of distribution
In the case of any distribution of property (other than cash), the amount taken into account under sections 661(a)(2) and 662(a)(2) shall be the lesser of—
(A) the basis of such property in the hands of the beneficiary (as determined under paragraph (1)), or
(B) the fair market value of such property.
(3) Election to recognize gain
(A) In general
In the case of any distribution of property (other than cash) to which an election under this paragraph applies—
(i) paragraph (2) shall not apply,
(ii) gain or loss shall be recognized by the estate or trust in the same manner as if such property had been sold to the distributee at its fair market value, and
(iii) the amount taken into account under sections 661(a)(2) and 662(a)(2) shall be the fair market value of such property.
(B) Election
Any election under this paragraph shall apply to all distributions made by the estate or trust during a taxable year and shall be made on the return of such estate or trust for such taxable year.
Any such election, once made, may be revoked only with the consent of the Secretary.
(4) Exception for distributions described in section 663(a)
This subsection shall not apply to any distribution described in section 663(a).
(f) Treatment of multiple trusts
For purposes of this subchapter, under regulations prescribed by the Secretary, 2 or more trusts shall be treated as 1 trust if—
(1) such trusts have substantially the same grantor or grantors and substantially the same primary beneficiary or beneficiaries, and
(2) a principal purpose of such trusts is the avoidance of the tax imposed by this chapter.
For purposes of the preceding sentence, a husband and wife shall be treated as 1 person.
(g) Certain payments of estimated tax treated as paid by beneficiary
(1) In general
In the case of a trust—
(A) the trustee may elect to treat any portion of a payment of estimated tax made by such trust for any taxable year of the trust as a payment made by a beneficiary of such trust,
(B) any amount so treated shall be treated as paid or credited to the beneficiary on the last day of such taxable year, and
(C) for purposes of subtitle F, the amount so treated—
(i) shall not be treated as a payment of estimated tax made by the trust, but
(ii) shall be treated as a payment of estimated tax made by such beneficiary on January 15 following the taxable year.
(2) Time for making election
An election under paragraph (1) shall be made on or before the 65th day after the close of the taxable year of the trust and in such manner as the Secretary may prescribe.
(3) Extension to last year of estate
In the case of a taxable year reasonably expected to be the last taxable year of an estate—
(A) any reference in this subsection to a trust shall be treated as including a reference to an estate, and
(B) the fiduciary of the estate shall be treated as the trustee.
(Aug. 16, 1954, ch. 736,
Amendments
1993—Subsec. (a)(3).
1989—Subsec. (a)(6)(A).
Subsec. (a)(6)(C).
Subsec. (a)(6)(D).
1988—Subsec. (g)(1).
Subsec. (g)(2).
"(A) only on the trust's return of the tax imposed by this chapter for the taxable year, and
"(B) only if such return is filed on or before the 65th day after the close of the taxable year."
Subsec. (g)(3).
1986—Subsec. (a)(3).
Subsec. (a)(7).
Subsec. (d).
Subsec. (e).
Subsec. (f).
Subsec. (g).
1984—Subsec. (d).
Subsec. (e).
1983—Subsec. (a)(7).
Subsec. (d).
1982—Subsec. (d).
1981—Subsec. (a)(7).
1980—Subsec. (a)(7).
1976—Subsec. (a)(6)(C).
Subsec. (a)(6)(D).
Subsec. (d).
1962—Subsec. (a)(6).
Subsec. (d).
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1989 Amendment
Amendment by
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by section 301(b)(7) of
Amendment by section 612(b)(4) of
Section 1404(d) of
Amendment by section 1806(a), (c) of
Effective Date of 1984 Amendment
Section 81(b) of
"(1)
"(2)
"(A) the time for making an election under section 643(d)(3) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by this section) shall not expire before January 1, 1985, and
"(B) the requirement that such election be made on the return of the estate or trust shall not apply."
Section 82(b) of
Section 722(h)(5) of
"(A) Except as provided in this paragraph, the amendments made by this subsection [amending this section and
"(B) The amendments made by paragraph (4) [amending
Effective Date of 1983 Amendment
Amendment by
Effective Date of 1981 Amendment
Amendment by section 301(b)(4) of
Effective and Termination Dates of 1980 Amendment
Amendment by
Effective Date of 1976 Amendment
For effective date of amendment by section 1013(e)(2) of
Section 1013(f)(2) of
Effective Date of 1962 Amendment
Section 7(j) of
Treatment as Single Trust
Section 1018(e) of
"(1) on a return for the 1st taxable year of the trusts involved beginning after March 1, 1984, 2 or more trusts were treated as a single trust for purposes of the tax imposed by
"(2) such trusts would have been required to be so treated but for the amendment made by section 1806(b) of the Reform Act [
"(3) such trusts did not accumulate any income during such taxable year and did not make any accumulation distributions during such taxable year,
then, notwithstanding the amendment made by section 1806(b) of the Reform Act, such trusts shall be treated as one trust for purposes of such taxable year."
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
Section Referred to in Other Sections
This section is referred to in
§644. Special rule for gain on property transferred to trust at less than fair market value
(a) Imposition of tax
(1) In general
If—
(A) a trust (or another trust to which the property is distributed) sells or exchanges property at a gain not more than 2 years after the date of the initial transfer of the property in trust by the transferor, and
(B) the fair market value of such property at the time of the initial transfer in trust by the transferor exceeds the adjusted basis of such property immediately after such transfer,
there is hereby imposed a tax determined in accordance with paragraph (2) on the includible gain recognized on such sale or exchange.
(2) Amount of tax
The amount of the tax imposed by paragraph (1) on any includible gain recognized on the sale or exchange of any property shall be equal to the sum of—
(A) the excess of—
(i) the tax which would have been imposed under this chapter for the taxable year of the transferor in which the sale or exchange of such property occurs had the amount of the includible gain recognized on such sale or exchange, reduced by any deductions properly allocable to such gain, been included in the gross income of the transferor for such taxable year, over
(ii) the tax actually imposed under this chapter for such taxable year on the transferor, plus
(B) if such sale or exchange occurs in a taxable year of the transferor which begins after the beginning of the taxable year of the trust in which such sale or exchange occurs, an amount equal to the amount determined under subparagraph (A) multiplied by the underpayment rate established under section 6621.
The determination of tax under clause (i) of subparagraph (A) shall be made by not taking into account any carryback, and by not taking into account any loss or deduction to the extent that such loss or deduction may be carried by the transferor to any other taxable year.
(3) Taxable year for which tax imposed
The tax imposed by paragraph (1) shall be imposed for the taxable year of the trust which begins with or within the taxable year of the transferor in which the sale or exchange occurs.
(4) Tax to be in addition to other taxes
The tax imposed by this subsection for any taxable year of the trust shall be in addition to any other tax imposed by this chapter for such taxable year.
(b) Definition of includible gain
For purposes of this section, the term "includible gain" means the lesser of—
(1) the gain recognized by the trust on the sale or exchange of any property, or
(2) the excess of the fair market value of such property at the time of the initial transfer in trust by the transferor over the adjusted basis of such property immediately after such transfer.
(c) Character of includible gain
For purposes of subsection (a)—
(1) The character of the includible gain shall be determined as if the property had actually been sold or exchanged by the transferor, and any activities of the trust with respect to the sale or exchange of the property shall be deemed to be activities of the transferor, and
(2) the portion of the includible gain subject to the provisions of section 1245 and section 1250 shall be determined in accordance with regulations prescribed by the Secretary.
(d) Special rules
(1) Short sales
If the trust sells the property referred to in subsection (a) in a short sale within the 2-year period referred to in such subsection, such 2-year period shall be extended to the date of the closing of such short sale.
(2) Substituted basis property
For purposes of this section, in the case of any property held by the trust which has a basis determined in whole or in part by reference to the basis of any other property which was transferred to the trust—
(A) the initial transfer of such property in trust by the transferor shall be treated as having occurred on the date of the initial transfer in trust of such other property,
(B) subsections (a)(1)(B) and (b)(2) shall be applied by taking into account the fair market value and the adjusted basis of such other property, and
(C) the amount determined under subsection (b)(2) with respect to such other property shall be allocated (under regulations prescribed by the Secretary) among such other property and all properties held by the trust which have a basis determined in whole or in part by reference to the basis of such other property.
(e) Exceptions
Subsection (a) shall not apply to property—
(1) acquired by the trust from a decedent or which passed to a trust from a decedent (within the meaning of section 1014), or
(2) acquired by a pooled income fund (as defined in section 642(c)(5)), or
(3) acquired by a charitable remainder annuity trust (as defined in section 664(d)(1)) or a charitable remainder unitrust (as defined in sections 664(d)(2) and (3)), or
(4) if the sale or exchange of the property occurred after the death of the transferor.
(f) Special rule for installment sales
If the trust reports income under section 453 on any sale or exchange to which subsection (a) applies, under regulations prescribed by the Secretary—
(1) subsection (a) (other than the 2-year requirement of paragraph (1)(A) thereof) shall be applied as if each installment were a separate sale or exchange of property to which such subsection applies, and
(2) the term "includible gain" shall not include any portion of an installment received by the trust after the death of the transferor.
(Added
Amendments
1986—Subsec. (a)(2)(B).
1980—Subsec. (f).
1978—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (b)(1).
Subsec. (d).
Subsec. (f)(1).
Effective Date of 1986 Amendment
Amendment by
Effective Date of 1980 Amendment
For effective date of amendment by
Effective Date of 1978 Amendment
Section 701(p)(5) of
"(A) Except as provided in subparagraph (B), the amendment made by this subsection [amending this section] shall apply to transfers in trust made after May 21, 1976.
"(B) The amendment made by paragraph (4) [repealing section 1402(b)(1)(K) of
Effective Date
Section applicable to transfers in trust made after May 21, 1976, see section 701(h) of
Repeals
Section 1402(b)(1)(K) of
Section Referred to in Other Sections
This section is referred to in
§645. Taxable year of trusts
(a) In general
For purposes of this subtitle, the taxable year of any trust shall be the calendar year.
(b) Exception for trusts exempt from tax and charitable trusts
Subsection (a) shall not apply to a trust exempt from taxation under section 501(a) or to a trust described in section 4947(a)(1).
(Added
Effective Date; Transition Rule
Section 1403(c) of
"(1)
"(2)
Application of Transition Rules to Trust Beneficiaries to Which Section 664 Applies
"(1) If a beneficiary of a trust to which section 664 of the 1986 Code applies elects (at such time and in such manner as the Secretary of the Treasury or his delegate may prescribe) to have this paragraph apply, such beneficiary shall be entitled to the benefits of section 1403(c)(2) of the Reform Act [
"(2) Any trust beneficiary may elect (at such time and in such manner as the Secretary of the Treasury or his delegate may prescribe) to waive the benefits of section 1403(c)(2) of the Reform Act.
"(3)(A) For purposes of determining the gross income of any pass-thru entity, such pass-thru entity shall not be allowed the benefits of section 806(e)(2)(C) [
"(B) For purposes of subparagraph (A), the term 'pass-thru entity' means any trust, partnership, S corporation, or common trust fund.
"(4) If any trust was required to change its taxable year by the amendments made by section 1403 of the Reform Act [
Section Referred to in Other Sections
This section is referred to in