Page:United States Statutes at Large Volume 83.djvu/623

 83 STAT. ]

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

of the trust when paid, credited, or required to be distributed to the nvtent that such total would have been included in the income of such beneficiary under section 662(a)(2) and (b) if such total had been paid to such beneficiary on the last day of such preceding taxable Vear. The tax imposed by this subtitle on a beneficiary for a taxable year in which any such amount is included in his income shall be determined only as provided in this section and shall consist of the sum of— "(1) a partial tax computed on the taxable income reduced by an amount equal to the total of such amounts, at the rate and iii the manner as if this section had not been enacted, "(2) a partial tax determined as provided in subsection (b) of this section, and " (3) in the case of a beneficiary of a trust which is not required to distribute all of its income currently, a partial tax determined as provided in section 669. For purposes of this subpart, a trust shall not be considered to be a trust which is not recjuired to distribute all of its income currently for any taxable year prior to the first taxable year in which income is accumulated. "(b)

TAX ON DISTRIBUTION.—

" (1) ALTERNATIVE METHODS.—Except as provided in paragraph

(2), the partial tax imposed by subsection (a)(2) shall be the lesser of— " (A) the aggregate of the taxes attributable to the amounts deemecl distributed under section 666 had they been included in the gross income of the beneficiary on the last day of each respective preceding taxable year, or " (B) the tax determined by multiplying, by the number of preceding taxable years of the trust, on the last day of which an amount is deemed under section 666(a) to have been distributed, the average of the increase in tax attributable to recomputing the beneficiary's gross income for each of the beneficiary's 3 taxable years immediately preceding the year of the accumulation distribution by adding to the income of each of such years an amount determined by dividing the amount deemed distributed under section 666 and required to be included in income under subsection (a) by such number of preceding taxable years of the trust, less an amount equal to the amount of taxes deemed distributed to the beneficiary under sections 666(b) and (c). "(2)

SPECIAL RULES.—

" (A) If a beneficiary was not in existence on the last day of a preceding taxable year of the trust with respect to which a distribution is deemed made under section 666(a), the partial tax under either paragraph (1)(A) or (1)(B) shall be computed as if the beneficiary were in existence on the last day of such year on the basis that the beneficiary had no gross income (other than amounts deemed distributed to him under sections 666 and 669 by the same or other trusts) and no deductions for such year. " (B) The partial tax shall not be computed under the provisions of subparagraph (B) of paragraph (1) if, in the same prior taxable year of the beneficiary in which any part of the accumulation distribution is deemed under section 666(a) to have been distributed to such beneficiary, some part of prior accumulation distributions by each of two or more other trusts

595

^'^ ^'^'- "o26 USC 662.

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