Page:United States Statutes at Large Volume 49 Part 1.djvu/1751

 170 6 Estates and trusts. Impo sitio n of tax. Application of tax. Trust accumulations. Income for current distribution, etc. Received during ad- min istr ation. For discretionary dis- tri buti on. Computation ; pay- ments by fiduciary. Exce ption. Post, p. 1707 . Ante, p. 1700 . Net income. Computation. Deduction with out limitation of gifts, etc ., under will or trust. Ante, p. 1660 . Additional ded uc- tions for current distri- but ions by f iduc iary. Limitation. Additional ded uc- tion for payment made or credited to benefici- ary. Included in net income of beneficiary, etc. 74TH C ONGRESS. SESS. II. CH. 690. JU NE 22, 1936 . Supplement E-Estates and Trusts SEC. 161. IMPOS ITION OF TAX. (a) APPLICATION OF TAx .-The taxes imposed by this title upon indivi duals shall apply to t he inc ome of estat es or of an y kind of property held in tru st, including- (1) Income accumulated in trust for the benefit of unborn or unascertained persons or persons with contingent interests, and in- come a ccumu lated or hel d for futur e dist ributi on un der th e term s 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 in- fant 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 tax shall be computed upon the net income of the estate or trust, and shall be paid by the fidu- ciar y, exc ept a s prov ided in se ction 166 ( relati ng to revoc able trusts ) and section 167 (relating to income for benefit of the grantor). For return made by beneficiary, see section 142. SEC. 162. NET INCOME. The net income of the estate or trust shall be computed in the same manner and on the same basis as in the case of an individual, except that- (a) There shall be allowed as a deduction (in lieu of the deduction for charitable, etc ., contributions authorized by s ection 23 (o)) any part of the gros s income, without limitation, which pursuant to the terms of the will or deed creating the trust, is durin g the taxable year paid or permanently set aside for the purposes and in the manner specified in section 23 (o), or is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the preventio n of cruelty to children or an imals, or for the establishment, acquisition, maintenance or operation of a public ceme tery n ot ope rated for p rofit ; (b) There shall be allowed as an additional deduction in com- puting the net income of the estate or trust the amount of the income of the estate or trust for its taxable year which is to be dis- tributed current ly by the fiduciary to th e beneficiaries, and the amount of the income collected by a guardian of an infant which is to be held or distributed as the court may direct, but the am ount so allowed as a deduction shall be included in computing the net income of the beneficiaries whether distributed to them or not. Any amount allowed as a deduction under this paragraph shall not be allowed as a deduction under subsection (c) of this section in the same or any succeeding taxable y ear ; (c) In the case of income received by estates of deceased persons during the period of administration or settlement of the estate, and in the case of income which, in the discretion of the fiduciary, may be either distributed to the beneficiary or accumulated, there shall be allowed as an additional deduction in computing the net income of the estate or trust the amount of the income of the estate or trust for its taxable year, which is properly paid or credited during such year to any legatee, heir, or beneficiary, but the amount so allowed as a deduction shall be included in computing the net income of the legatee, heir, or beneficiary.