Page:United States Statutes at Large Volume 92 Part 3.djvu/278

 92 STAT. 2910

PUBLIC LAW 95-600—NOV. 6, 1978

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separately with respect to amounts added under subsection (b)(l)(C) to the tsixable income of the beneficiary for such computation year. For purposes of computing the , ,, increase in tax under subsection (b)(1)(D) for any computation year for which the beneficiary did not choose the benefits of subpart A of part III of subchapter N, the beneficiary shall be treated as having chosen such benefits for such computation year. "(ii) RETENTION OF CHARACTER.—The items of income, deduction, and credit of the Trust shall retain their 26 USC 904. '* character (subject to the application of section 904(f)(5)) to the extent necessary to apply this paragraph. "(D) COMPUTATION YEAR.—For purposes of this paragraph, " ^' >» ' the term 'computation year' means any of the three taxable years remaining after application of subsection (b)(1)(B).". 26 USC 667. (C) The last sentence of section 667(b)(1) is amended by inserting "(other than the amount of taxes described in Ante, p. 2909. section 665(d)(2))" after "taxes". 26 USC 904. (2) RECAPTURE OF OVERALL FOREIGN LOSS.—Section 904(f) is amended by adding at the end thereof the following new paragraph: "(5) ACCUMULATION DISTRIBUTIONS OF FOREIGN TRUST.—For

26 USC 666. 26 USC 667.

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purposes of this chapter, in the case of amounts of income from sources without the United States which are treated under section 666 (without regard to subsections (b) and (c) thereof if the taxpayer chose to take a deduction with respect to the amounts described in such subsections under section 667(d)(1)(B)) as having been distributed by a foreign trust in a preceding taxable year, that portion of such amounts equal to the amount of any overall foreign loss sustained by the beneficiary in a year prior to the taxable year of the beneficiary in which such distribution is received from the trust shall be treated as income from sources within the United States (and not income from sources without the United States) to the extent that such loss was not used under this subsection in prior taxable years, or in the current taxable year, against other income of the beneficiary.". (3) EFFECTIVE DATES.—

26 USC 665 note. 26 USC 904 note. 26 USC 904. 26 USC 904.

(A) The amendments made by paragraph (1) shall apply to distributions made in taxable years beginning after December 31, 1975. (B) The amendments made by paragraph (2) shall take effect as if included in section 904(6 of the Internal Revenue Code of 1954, as such provision was added to such Code by section 1032(a) of the Tax Reform Act of 1976. (r) RETENTION OF CHARACTER OF AMOUNTS DISTRIBUTED FROM ACCUMULATION TRUST TO NONRESIDENT ALIENS AND FOREIGN CORPORATIONS.—

26 USC 667.

(1) IN GENERAL.—Section 667 (relating to treatment of amounts deemed distributed by trust in preceding years) is amended by adding at the end thereof the following new subsection: "(e) RETENTION OF CHARACTER OF AMOUNTS DISTRIBUTED FROM ACCUMULATION TRUST TO NONRESIDENT ALIENS AND FOREIGN CORPO-

26 USC 662.

RATIONS.—In the case of a distribution from a trust to a nonresident alien individual or to a foreign corporation, the first sentence of subsection (a) shall be applied as if the reference to the determination of character under section 662(b) applied to all amounts instead of just to tax-exempt interest."

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