Page:United States Statutes at Large Volume 90 Part 2.djvu/149

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1617

(A) foreign trusts created after May 21, 1974, and (B) transfers of property to foreign trusts after May 21, 1974. (2) CHANGES IN CAPITAL GAIN RULES FOR FOREIGN TRUSTS.—The

amendments made by subsection (c) shall apply to taxable years beginning after December 31, 1975. SEC. 1014. INTEREST CHARGE ON ACCUMULATION DISTRIBUTIONS FROM FOREIGN TRUSTS. (a) T A X TO INCLUDE SPECIAL INTEREST CHARGE.—Section 667(a)

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26 USC 643

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(as amended by section 701 of this Act) is amended by striking out ^"fi^" and " at the end of paragraph (1), by striking out the period a t the end of paragraph (2) and inserting in lieu thereof ", and '', and by a d d i n g at the end thereof the following new paragraph: " (3) in the case of a foreign trust, the interest charge determined as provided in section 668." Infra. (b)

COMPUTATION OF SPECIAL INTEREST C H A R G E. — Subpart D of

part I of subchapter J of chapter 1 (relating to treatment of excess distributions by trusts) is amended by a d d i n g at the end thereof the following new section: "SEC. 668. INTEREST CHARGE ON ACCUMULATION DISTRIBUTIONS FROM FOREIGN TRUSTS. "(a)

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26 USC 668.

GENERAL RULE. — For purposes of the tax determined under

section 6 6 7 (a), the interest.charge is an amount equal to 6 percent of the partial tax computed under section 667(b) multiplied by a fraction— " (1) the numerator of which is the sum of the number of taxable years between each taxable year to which the distribution is allocated under section 666(a) and the taxable year of the distribution (counting in each case the taxable year to which the distribution is allocated b u t not counting the taxable year of the distribution), and " (2) the denominator of which is the number of taxable years to which the distribution is allocated under section 6 6 6 (a). " (b) LIMITATION.—The total amount of the interest charge shall not, when added to the total partial tax computed under section 667 (b), exceed the amount of the accumulation distribution (other than the amount of tax deemed distributed by section 666(b) or (c)) in respect of which such partial tax was determined.

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" (c) SPECIAL RULES. — " (1) INTEREST CHARGE NOT DEDUCTIBLE,—The interest charge

determined under this section shall not be allowed as a deduction for purposes of any tax imposed by this title. "(2)

TRANSITIONAL

RULE.—For

purposes

of

this

section,

undistributed net income existing in a trust as of January 1, 1977, shall be treated as allocated under section 666(a) to the first taxable year beginning after December 31, 1976."

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(c) CLERICAL AMENDMENT. — The table of sections for subpart D of

part I of subchapter J of chapter 1 is amended by a d d i n g a t the end thereof of the following new item: Sec. 668. Interest charge on accumulation distributions from foreign trusts."

(d) EFFECTIVE D A T E. — The amendments made by this section shall a p p l y to taxable years beginning after December 31, 1976. SEC. 1015. EXCISE TAX ON TRANSFERS OF PROPERTY TO FOREIGN PERSONS TO AVOID FEDERAL INCOME TAX, (a) AMENDMENT OF SECTION 1491.—Section 1491 ( r e l a t i n g to im-

position of tax) is amended to read as follows:

26 USC 668 °°*®'^" 26 USC 1491.

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