Page:United States Statutes at Large Volume 83.djvu/621

 83 STAT. ]

PUBLIC LAW 91-172-DEC. 30, 1%9

593

" (B) which begins before January 1, 1969, in the case of an accumulation distribution made during a taxable year beginning after December 31, 1973, or "(C) which begins before January 1, 1969, in the case of a capital gam distribution made during a taxable year beginning after December 31, 1968; and «(2) m the case of a foreign trust created by a United States person, such term does not include any taxable year of the trust to which this part does not apply. In the case of a preceding taxable year with respect to which a trust qualifies (without regard to this subpart) under the provisions of subpart B, for purposes of the application of this subpart to such trust for such taxable year, such trust shall, in accordance with regulations prescribed by the Secretary or his delegate, be treated as a trust to which subpart C applies. "(f) UNDISTRIBUTED CAPITAL G A I N. — For purposes of this subpart, the term 'undistributed capital gain' means, for any taxable year of the trust beginning after December 31, 1968, the amount by which— "(1) gains in excess of losses from the sale or exchange of capital assets, 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 such taxable year, or (B) paid, permanently set aside, or used for the purposes specifi^ed m section 642(c), exceed "(2) the amount of taxes imposed on the trust attributable to such gains. For purposes of paragraph (1), the deduction under section 1202 (relating to deduction for excess of capital gains over capital losses) shall not be taken into account. "(g) CAPITAL G A I N DISTRIBUTION,—For purposes of this subpart, the term 'capital gain distribution' for any taxable year of the trust means, to the extent of undistributed capital gain for such taxable year, that portion of— "(1) the excess of the amounts specified in paragraph (2) of section 661(a) for such taxable year over distributable net income for such year reduced (but not below zero) by the amounts specified in paragraph (1) of section 661(a), over "(2) the undistributed net income of the trust for all preceding taxable years. "SEC. 666. ACCUMULATION DISTRIBUTION ALLOCATED TO PRECEDING YEARS. "(a) AMOUNT ALLOCATED.—In the case of a trust which is subject to subpart C, the amount of the accumulation distribution of such trust for a taxable year shall be deemed to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of each of the preceding taxable years, commencing with the earliest of such years, to the extent that such amount exceeds the total of any undistributed net income for all earlier preceding taxable years. The amount deemed to be distributed in any such preceding taxable year under the preceding sentence shall not exceed the undistributed net income for such preceding taxable year. For purposes of this subsection, undistributed net income for each of such preceding taxable years shall be computed without regard to such accumulation distribution and without regard to any accumulation distribution determined for any succeeding taxable year. '(b)

TOTAL TAXES DEEMED DISTRIBUTED.—If any

portion of

an

accumulation distribution for any taxable year is deemed under subs^tion (a) to be an amount within the meaning of paragraph (2)

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