Page:United States Statutes at Large Volume 90 Part 2.djvu/111

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1579

" (4) T A X TO BE I N ADDITION TO OTHER TAXES.—The tax imposed

by this subsection for any taxable year of the t r u s t shall be i n addition to any other tax imposed by this chapter for such taxable year. " (b) DEFINITION OF INCLUDIBLE G A I N. — For purposes of t h i s section,

the term 'includible gain' means the lesser of— " (1) the gain realized by the trust on the sale or exchange of any property, or " (2) the excess of the fair market value of such property a t the time of the initial transfer in trust by the transferor over the adjusted basis of such property immediately after such transfer. " (c) CHARACTER OF INCLUDIBLE G A I N. — For purposes of subsection

(a)-

. . . " (1) the character of the includible g a m shall be determined as if the property h a d actually been sold or exchanged by the transferor, and any activities of the trust with respect to the sale or exchange of the property shall be deemed to be activities of the transferor, and " (2) the portion of the includible gain subject to the provisions of section 1245 and section 1250 shall be determined in accordance with regulations prescribed by the Secretary.

" (d) SPECIAL RULE FOR SHORT S A L E S. — I f the t r u s t sells the p r o p -

erty referred to in subsection (a) in a short sale within the 2-year period referred to in such subsection, such 2-year period shall be extended to the date of the closing of such short sale. " (e) EXCEPTIONS.—Subsection (a) shall not apply to property— " (1) acquired by the trust from a decedent or which passed to a trust from a decedent (within the meaning of section 1014), or " (2) acquired by a pooled income fund (as defined in section 6 4 2 (c)(5)), or " (3) acquired by a charitable remainder annuity t r u s t (as defined in section 664(d)(1)) or a charitable remainder unitrust (as defined in sections 664(d)(2) and (3)), or " (4) if the sale or exchange of the property occurred after the death of the transferor. "(f)

,

SPECIAL RULE FOR INSTALLMENT SALES.^—If the t r u s t elects to

report income under section 453 on any sale or exchange to which subsection (a) applies, under regulations prescribed by the Secretary— " (1) subsection (a) shall be applied as if each installment were a separate sale or exchange of proj^erty to which such subsection applies, and " (2) the term 'includible gain' shall not include any portion of "Includible an installment received by the t r u s t after the death of the gain." transferor." (2) EXCLUSION OF INCLUDIBLE GAIN FROM TAXABLE INCOME.—Sec-

tion 641 (relating to imposition of tax) is amended by inserting after subsection (b) the following new subsection: " (c) EXCLUSION OF INCLUDIBLE G A I N F R O M TAXABLE I N C O M E. —

" (1) GENERAL RULE.—For purposes of this part, the taxable income of a trust does not include the amount of any includible gain as defined i n section 644(b) reduced by any deductions properly allocable thereto. " (2) CROSS REFERENCE.—•

"For the taxation of any includible gain, see section 644.",

26 USC 641.

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