Page:United States Statutes at Large Volume 68A.djvu/260

 220

INTERNAL REVENUE CODE OF 1954

ficiary is required to include in gross income in accordance with the provisions of this section shall be based upon the amount of income of the trust for any taxable year or years of the trust ending within or with his taxable year. Subpart C—Estates and Trusts Which May Accumulate Income or Which Distribute Corpus Sec. 661. Deductions for estates and trusts accumulating income or distributing corpus. Sec. 662, Inclusion of amounts in gross income of beneficiaries of estates and trusts accumulating income or distributing corpus. Sec. 663. Special rules applicable to sections 661 and 662. SEC. 661. DEDUCTION FOR ESTATES AND TRUSTS INCOME OR DISTRIBUTING CORPUS.

ACCUMULATING

(a) DEDUCTION.—In any taxable year there shall be allowed as a deduction in computing the taxable income of an estate or trust (other than a trust to which subpart B applies), the sum of— (1) any amount of income for such taxable year required to be distributed currently (including any amount required to be distributed which may be paid out of income or corpus to the extent such amount is paid out of income for such taxable year); and (2) any other amounts properly paid or credited or required to be distributed for such taxable year; b u t such deduction shall not exceed the distributable net income of the estate or trust. (b) CHARACTER OF AMOUNTS DISTRIBUTED.—The amount determined under subsection (a) shall be treated as consisting of the same proportion of each class of items entering into the computation of distributable net income of the estate or trust as the total of each class bears to the total distributable net income of the estate or trust in the absence of the allocation of different classes of income under the specific terms of the governing instrument. In the application of the preceding sentence, the items of deduction entering into the computation of distributable net income (including the deduction allowed under section 642(c)) shall be allocated among the items of distributable net income in accordance with regulations prescribed by the Secretary or his delegate. (c) LIMITATION ON DEDUCTION.—No deduction shall be allowed under subsection (a) in respect of any portion of the amount allowed as a deduction under that subsection (without regard to this subsection) which is treated under subsection (b) as consisting of any item of distributable net income which is not included in the gross income of the estate or trust. SEC. 662. INCLUSION OF AMOUNTS IN GROSS INCOME OF BENEFICIARIES OF ESTATES AND TRUSTS ACCUMULATING INCOME OR DISTRIBUTING CORPUS.

(a) INCLUSION.—Subject to subsection (b), there shall be included in the gross income of a beneficiary to whom an amount specified in section 661(a) is paid, credited, or required to be distributed (by an estate or trust described in section 661), the sum of the following amounts: § 652(c)

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