Page:United States Statutes at Large Volume 68A.djvu/266

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INTERNAL REVENUE CODE OF 1954

trust for such preceding taxable year had the trust in fact made distributions to such beneficiaries at the times and in the amounts specified in section 666. Subpart E—Grantors and Others Treated as Substantial Owners Sec. 671. Trust income, deductions, and credits attributable to grantors and others as substantial owners. Sec. 672. Definitions and rules. Sec. 673. Reversionary interests. Sec. 674. Power to control beneficial enjoyment. Sec. 675. Administrative powers. Sec. 676. Power to revoke. Sec. 677. Income for benefit of grantor. Sec. 678. Person other than grantor treated as substantial owner. SEC. 671. TRUST INCOME, DEDUCTIONS, AND CREDITS ATTRIBUTABLE TO GRANTORS AND OTHERS AS SUBSTANTIAL OWNERS.

Where it is specified in this subpart that the grantor or another person shall be treated as the owner of any portion of a trust, there shall then be included in computing the taxable income and credits of the grantor or the other person those items of income, deductions, and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under this chapter in computing taxable income or credits against the tax of an individual. Any remaining portion of the trust shall be subject to subparts A through D. No items of a trust shall be included in computing the taxable income and credits of the grantor or of any other person solely on the grounds of his dominion and control over the trust under section 61 (relating to definition of gross income) or any other provision of this title, except as specified in this subpart. SEC. 672. DEFINITIONS AND RULES. (a) ADVERSE PARTY.—For purposes of this subpart, the term "adverse party " means any person having a substantial beneficial interest in the trust which would be adversely affected by the exercise or nonexercise of the power which he possesses respecting the trust. A person having a general power of appointment over the trust property shall be deemed to have a beneficial interest in the trust. (b) NoNADVERSE PARTY.—For purposes of this subpart, the term "nonadverse party " means any person who is not an adverse party. (c) RELATED OR SUBORDINATE PARTY.—For purposes of this subpart, the term "related or subordinate party " means any nonadverse party who is— (1) the grantor's spouse if living with the grantor; (2) any one of the following: The grantor's father, mother, issue, brother or sister; an employee of the grantor; a corporation or any employee of a corporation in which the stock holdings of the grantor and the trust are significant from the viewpoint of voting control; a subordinate employee of a corporation in which the grantor is an executive. For purposes of sections 674 and 675, a related or subordinate party shall be presumed to be subservient to the grantor in respect of the exercise or nonexercise of the powers conferred on him unless such party is shown not to be subservient by a preponderance of the evidence. § 668(b)

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