LAST CHANCE: Who Will Be The Next FlyerTalk Member To Fly Free To Amsterdam?
Nov 7, 2008 | 3:22 pm
FlyerTalk Evangelist
Join Date: Feb 2006
Location: A festering pit; a pustule of a fistula set athwart the miasmic swamps of the armpit of the Gulf of Mexico - a Godforsaken wart upon a dark crevasse of the World. (IAH)
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Posts: 31,403
§ 667. Treatment of amounts deemed distributed by trust in preceding years
How Current is This?
(a) General rule
The total of the amounts which are treated under section 666 as having been distributed by a trust in a preceding taxable year shall be included in the income of a beneficiary of the trust when paid, credited, or required to be distributed to the extent that such total would have been included in the income of such beneficiary under section 662 (a)(2) (and, with respect to any tax-exempt interest to which section 103 applies, under section 662 (b)) if such total had been paid to such beneficiary on the last day of such preceding taxable year. 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 in 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 foreign trust, the interest charge determined as provided in section 668.
(b) Tax on distribution
(1) In general
The partial tax imposed by subsection (a)(2) shall be determined.
(A) by determining 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,
(B) by taking from the 5 taxable years immediately preceding the year of the accumulation distribution the 1 taxable year for which the beneficiary’s taxable income was the highest and the 1 taxable year for which his taxable income was the lowest,
(C) by adding to the beneficiary’s taxable income for each of the 3 taxable years remaining after the application of subparagraph (B) an amount determined by dividing the amount deemed distributed under section 666 and required to be included in income under subsection (a) by the number of preceding taxable years determined under subparagraph (A), and
(D) by determining the average increase in tax for the 3 taxable years referred to in subparagraph (C) resulting from the application of such subparagraph.
The partial tax imposed by subsection (a)(2) shall be the excess (if any) of the average increase in tax determined under subparagraph (D), multiplied by the number of preceding taxable years determined under subparagraph (A), over the amount of taxes (other than the amount of taxes described in section 665 (d)(2)) deemed distributed to the beneficiary under sections 666 (b) and (c).
(2) Treatment of loss years
For purposes of paragraph (1), the taxable income of the beneficiary for any taxable year shall be deemed to be not less than zero.
(3) Certain preceding taxable years not taken into account
For purposes of paragraph (1), if the amount of the undistributed net income deemed distributed in any preceding taxable year of the trust is less than 25 percent of the amount of the accumulation distribution divided by the number of preceding taxable years to which the accumulation distribution is allocated under section 666 (a), the number of preceding taxable years of the trust with respect to which an amount is deemed distributed to a beneficiary under section 666 (a) shall be determined without regard to such year.
(4) Effect of other accumulation distributions
In computing the partial tax under paragraph (1) for any beneficiary, the income of such beneficiary for each of his prior taxable years shall include amounts previously deemed distributed to such beneficiary in such year under section 666 as a result of prior accumulation distributions (whether from the same or another trust).
(5) Multiple distributions in the same taxable year
In the case of accumulation distributions made from more than one trust which are includible in the income of a beneficiary in the same taxable year, the distributions shall be deemed to have been made consecutively in whichever order the beneficiary shall determine.
(6) Adjustment in partial tax for estate and generation-skipping transfer taxes attributable to partial tax
(A) In general
The partial tax shall be reduced by an amount which is equal to the pre-death portion of the partial tax multiplied by a fraction—
(i) the numerator of which is that portion of the tax imposed by chapter 11 or 13, as the case may be, which is attributable (on a proportionate basis) to amounts included in the accumulation distribution, and
(ii) the denominator of which is the amount of the accumulation distribution which is subject to the tax imposed by chapter 11 or 13, as the case may be.
(B) Partial tax determined without regard to this paragraph
For purposes of this paragraph, the term “partial tax” means the partial tax imposed by subsection (a)(2) determined under this subsection without regard to this paragraph.
(C) Pre-death portion
For purposes of this paragraph, the pre-death portion of the partial tax shall be an amount which bears the same ratio to the partial tax as the portion of the accumulation distribution which is attributable to the period before the date of the death of the decedent or the date of the generation-skipping transfer bears to the total accumulation distribution.
(c) Special rule for multiple trusts
(1) In general
If, in the same prior taxable year of the beneficiary in which any part of the accumulation distribution from a trust (hereinafter in this paragraph referred to as “third trust”) is deemed under section 666 (a) to have been distributed to such beneficiary, some part of prior distributions by each of 2 or more other trusts is deemed under section 666 (a) to have been distributed to such beneficiary, then subsections (b) and (c) of section 666 shall not apply with respect to such part of the accumulation distribution from such third trust.
(2) Accumulation distributions from trust not taken into account unless they equal or exceed $1,000
For purposes of paragraph (1), an accumulation distribution from a trust to a beneficiary shall be taken into account only if such distribution, when added to any prior accumulation distributions from such trust which are deemed under section 666 (a) to have been distributed to such beneficiary for the same prior taxable year of the beneficiary, equals or exceeds $1,000.
(d) Special rules for foreign trust
(1) Foreign tax deemed paid by beneficiary
(A) In general
In determining the increase in tax under subsection (b)(1)(D) for any computation year, the taxes described in section 665 (d)(2) which are deemed distributed under section 666 (b) or (c) and added under subsection (b)(1)(C) to the taxable income of the beneficiary for any computation year shall, except as provided in subparagraphs (B) and (C), be treated as a credit against the increase in tax for such computation year under subsection (b)(1)(D).
(B) Deduction in lieu of credit
If the beneficiary did not choose the benefits of subpart A of part III of subchapter N with respect to the computation year, the beneficiary may in lieu of treating the amounts described in subparagraph (A) (without regard to subparagraph (C)) as a credit may treat such amounts as a deduction in computing the beneficiary’s taxable income under subsection (b)(1)(C) for the computation year.
(C) Limitation on credit; retention of character
(i) Limitation on credit For purposes of determining under subparagraph (A) the amount treated as a credit for any computation year, the limitations under subpart A of part III of subchapter N shall be applied separately with respect to amounts added under subsection (b)(1)(C) to the taxable 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 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).
(e) Retention of character of amounts distributed from accumulation trust to nonresident aliens and foreign corporations
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.
How Current is This?
(a) General rule
The total of the amounts which are treated under section 666 as having been distributed by a trust in a preceding taxable year shall be included in the income of a beneficiary of the trust when paid, credited, or required to be distributed to the extent that such total would have been included in the income of such beneficiary under section 662 (a)(2) (and, with respect to any tax-exempt interest to which section 103 applies, under section 662 (b)) if such total had been paid to such beneficiary on the last day of such preceding taxable year. 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 in 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 foreign trust, the interest charge determined as provided in section 668.
(b) Tax on distribution
(1) In general
The partial tax imposed by subsection (a)(2) shall be determined.
(A) by determining 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,
(B) by taking from the 5 taxable years immediately preceding the year of the accumulation distribution the 1 taxable year for which the beneficiary’s taxable income was the highest and the 1 taxable year for which his taxable income was the lowest,
(C) by adding to the beneficiary’s taxable income for each of the 3 taxable years remaining after the application of subparagraph (B) an amount determined by dividing the amount deemed distributed under section 666 and required to be included in income under subsection (a) by the number of preceding taxable years determined under subparagraph (A), and
(D) by determining the average increase in tax for the 3 taxable years referred to in subparagraph (C) resulting from the application of such subparagraph.
The partial tax imposed by subsection (a)(2) shall be the excess (if any) of the average increase in tax determined under subparagraph (D), multiplied by the number of preceding taxable years determined under subparagraph (A), over the amount of taxes (other than the amount of taxes described in section 665 (d)(2)) deemed distributed to the beneficiary under sections 666 (b) and (c).
(2) Treatment of loss years
For purposes of paragraph (1), the taxable income of the beneficiary for any taxable year shall be deemed to be not less than zero.
(3) Certain preceding taxable years not taken into account
For purposes of paragraph (1), if the amount of the undistributed net income deemed distributed in any preceding taxable year of the trust is less than 25 percent of the amount of the accumulation distribution divided by the number of preceding taxable years to which the accumulation distribution is allocated under section 666 (a), the number of preceding taxable years of the trust with respect to which an amount is deemed distributed to a beneficiary under section 666 (a) shall be determined without regard to such year.
(4) Effect of other accumulation distributions
In computing the partial tax under paragraph (1) for any beneficiary, the income of such beneficiary for each of his prior taxable years shall include amounts previously deemed distributed to such beneficiary in such year under section 666 as a result of prior accumulation distributions (whether from the same or another trust).
(5) Multiple distributions in the same taxable year
In the case of accumulation distributions made from more than one trust which are includible in the income of a beneficiary in the same taxable year, the distributions shall be deemed to have been made consecutively in whichever order the beneficiary shall determine.
(6) Adjustment in partial tax for estate and generation-skipping transfer taxes attributable to partial tax
(A) In general
The partial tax shall be reduced by an amount which is equal to the pre-death portion of the partial tax multiplied by a fraction—
(i) the numerator of which is that portion of the tax imposed by chapter 11 or 13, as the case may be, which is attributable (on a proportionate basis) to amounts included in the accumulation distribution, and
(ii) the denominator of which is the amount of the accumulation distribution which is subject to the tax imposed by chapter 11 or 13, as the case may be.
(B) Partial tax determined without regard to this paragraph
For purposes of this paragraph, the term “partial tax” means the partial tax imposed by subsection (a)(2) determined under this subsection without regard to this paragraph.
(C) Pre-death portion
For purposes of this paragraph, the pre-death portion of the partial tax shall be an amount which bears the same ratio to the partial tax as the portion of the accumulation distribution which is attributable to the period before the date of the death of the decedent or the date of the generation-skipping transfer bears to the total accumulation distribution.
(c) Special rule for multiple trusts
(1) In general
If, in the same prior taxable year of the beneficiary in which any part of the accumulation distribution from a trust (hereinafter in this paragraph referred to as “third trust”) is deemed under section 666 (a) to have been distributed to such beneficiary, some part of prior distributions by each of 2 or more other trusts is deemed under section 666 (a) to have been distributed to such beneficiary, then subsections (b) and (c) of section 666 shall not apply with respect to such part of the accumulation distribution from such third trust.
(2) Accumulation distributions from trust not taken into account unless they equal or exceed $1,000
For purposes of paragraph (1), an accumulation distribution from a trust to a beneficiary shall be taken into account only if such distribution, when added to any prior accumulation distributions from such trust which are deemed under section 666 (a) to have been distributed to such beneficiary for the same prior taxable year of the beneficiary, equals or exceeds $1,000.
(d) Special rules for foreign trust
(1) Foreign tax deemed paid by beneficiary
(A) In general
In determining the increase in tax under subsection (b)(1)(D) for any computation year, the taxes described in section 665 (d)(2) which are deemed distributed under section 666 (b) or (c) and added under subsection (b)(1)(C) to the taxable income of the beneficiary for any computation year shall, except as provided in subparagraphs (B) and (C), be treated as a credit against the increase in tax for such computation year under subsection (b)(1)(D).
(B) Deduction in lieu of credit
If the beneficiary did not choose the benefits of subpart A of part III of subchapter N with respect to the computation year, the beneficiary may in lieu of treating the amounts described in subparagraph (A) (without regard to subparagraph (C)) as a credit may treat such amounts as a deduction in computing the beneficiary’s taxable income under subsection (b)(1)(C) for the computation year.
(C) Limitation on credit; retention of character
(i) Limitation on credit For purposes of determining under subparagraph (A) the amount treated as a credit for any computation year, the limitations under subpart A of part III of subchapter N shall be applied separately with respect to amounts added under subsection (b)(1)(C) to the taxable 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 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).
(e) Retention of character of amounts distributed from accumulation trust to nonresident aliens and foreign corporations
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.
Nov 7, 2008 | 3:22 pm
FlyerTalk Evangelist
Join Date: Feb 2007
Location: Los Angeles / Basel
Programs: UA 1K MM, AA EXP, Hyatt Globalist
Posts: 27,094
Nov 7, 2008 | 3:22 pm
FlyerTalk Evangelist
Join Date: Jul 2007
Location: DFW
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Posts: 23,199
22892 737-2B7 Fresh Air 30/09/1983 5N-BFQ Stored
Nov 7, 2008 | 3:22 pm
Join Date: Mar 2006
Location: Bay Area
Programs: UA, Marriott, WN
Posts: 3,864
The anguish lectures the abuse.
Nov 7, 2008 | 3:22 pm
Join Date: Jan 2006
Location: BNA
Programs: HH Silver IHG Platinum
Posts: 3,736
State highways in TN.
SR 423
This one is a local route in Carroll County. It was a county road that the state took over to provide maintance.
SR 423
This one is a local route in Carroll County. It was a county road that the state took over to provide maintance.
Nov 7, 2008 | 3:22 pm
FlyerTalk Evangelist
Join Date: Aug 2005
Location: DCA
Programs: Kommissar Giga-Posting Direktor, PWP; Fasano Nouveau Aristocrat; CO Platinum; BD Gold; MR Gold
Posts: 18,733
Good one.
Nov 7, 2008 | 3:22 pm
FlyerTalk Evangelist
Join Date: Feb 2006
Location: A festering pit; a pustule of a fistula set athwart the miasmic swamps of the armpit of the Gulf of Mexico - a Godforsaken wart upon a dark crevasse of the World. (IAH)
Programs: UA Lifetime Gold, BA Silver, Marriott Lifetime Plat, Hilton Gold, Accor Gold
Posts: 31,403
§ 668. Interest charge on accumulation distributions from foreign trusts
How Current is This?
(a) General rule
For purposes of the tax determined under section 667 (a)—
(1) Interest determined using underpayment rates
The interest charge determined under this section with respect to any distribution is the amount of interest which would be determined on the partial tax computed under section 667 (b) for the period described in paragraph (2) using the rates and the method under section 6621 applicable to underpayments of tax.
(2) Period
For purposes of paragraph (1), the period described in this paragraph is the period which begins on the date which is the applicable number of years before the date of the distribution and which ends on the date of the distribution.
(3) Applicable number of years
For purposes of paragraph (2)—
(A) In general
The applicable number of years with respect to a distribution is the number determined by dividing—
(i) the sum of the products described in subparagraph (B) with respect to each undistributed income year, by
(ii) the aggregate undistributed net income.
The quotient determined under the preceding sentence shall be rounded under procedures prescribed by the Secretary.
(B) Product described
For purposes of subparagraph (A), the product described in this subparagraph with respect to any undistributed income year is the product of—
(i) the undistributed net income for such year, and
(ii) the sum of the number of taxable years between such year and the taxable year of the distribution (counting in each case the undistributed income year but not counting the taxable year of the distribution).
(4) Undistributed income year
For purposes of this subsection, the term “undistributed income year” means any prior taxable year of the trust for which there is undistributed net income, other than a taxable year during all of which the beneficiary receiving the distribution was not a citizen or resident of the United States.
(5) Determination of undistributed net income
Notwithstanding section 666, for purposes of this subsection, an accumulation distribution from the trust shall be treated as reducing proportionately the undistributed net income for undistributed income years.
(6) Periods before 1996
Interest for the portion of the period described in paragraph (2) which occurs before January 1, 1996, shall be determined—
(A) by using an interest rate of 6 percent, and
(B) without compounding until January 1, 1996.
(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.
(c) 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.
How Current is This?
(a) General rule
For purposes of the tax determined under section 667 (a)—
(1) Interest determined using underpayment rates
The interest charge determined under this section with respect to any distribution is the amount of interest which would be determined on the partial tax computed under section 667 (b) for the period described in paragraph (2) using the rates and the method under section 6621 applicable to underpayments of tax.
(2) Period
For purposes of paragraph (1), the period described in this paragraph is the period which begins on the date which is the applicable number of years before the date of the distribution and which ends on the date of the distribution.
(3) Applicable number of years
For purposes of paragraph (2)—
(A) In general
The applicable number of years with respect to a distribution is the number determined by dividing—
(i) the sum of the products described in subparagraph (B) with respect to each undistributed income year, by
(ii) the aggregate undistributed net income.
The quotient determined under the preceding sentence shall be rounded under procedures prescribed by the Secretary.
(B) Product described
For purposes of subparagraph (A), the product described in this subparagraph with respect to any undistributed income year is the product of—
(i) the undistributed net income for such year, and
(ii) the sum of the number of taxable years between such year and the taxable year of the distribution (counting in each case the undistributed income year but not counting the taxable year of the distribution).
(4) Undistributed income year
For purposes of this subsection, the term “undistributed income year” means any prior taxable year of the trust for which there is undistributed net income, other than a taxable year during all of which the beneficiary receiving the distribution was not a citizen or resident of the United States.
(5) Determination of undistributed net income
Notwithstanding section 666, for purposes of this subsection, an accumulation distribution from the trust shall be treated as reducing proportionately the undistributed net income for undistributed income years.
(6) Periods before 1996
Interest for the portion of the period described in paragraph (2) which occurs before January 1, 1996, shall be determined—
(A) by using an interest rate of 6 percent, and
(B) without compounding until January 1, 1996.
(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.
(c) 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.
Nov 7, 2008 | 3:23 pm
FlyerTalk Evangelist
Join Date: Jul 2007
Location: DFW
Programs: UA Pleb, HH Gold, PWP General Secretary
Posts: 23,199
22903 737-2H4 Benin Golf Air 19/08/1982 XU-RKC Active
Nov 7, 2008 | 3:23 pm
FlyerTalk Evangelist
Join Date: Aug 2005
Location: DCA
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Deemed distributions are important.
Nov 7, 2008 | 3:23 pm
Join Date: Mar 2006
Location: Bay Area
Programs: UA, Marriott, WN
Posts: 3,864
Our apathy pushes the county trolley.
Nov 7, 2008 | 3:23 pm
FlyerTalk Evangelist
Join Date: Feb 2006
Location: A festering pit; a pustule of a fistula set athwart the miasmic swamps of the armpit of the Gulf of Mexico - a Godforsaken wart upon a dark crevasse of the World. (IAH)
Programs: UA Lifetime Gold, BA Silver, Marriott Lifetime Plat, Hilton Gold, Accor Gold
Posts: 31,403
§ 671. Trust income, deductions, and credits attributable to grantors and others as substantial owners
How Current is This?
Where it is specified in this subpart that the grantor or another person shall be treated as the owner of any portion of a trust, there shall then be included in computing the taxable income and credits of the grantor or the other person those items of income, deductions, and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under this chapter in computing taxable income or credits against the tax of an individual. Any remaining portion of the trust shall be subject to subparts A through D. No items of a trust shall be included in computing the taxable income and credits of the grantor or of any other person solely on the grounds of his dominion and control over the trust under section 61 (relating to definition of gross income) or any other provision of this title, except as specified in this subpart.
How Current is This?
Where it is specified in this subpart that the grantor or another person shall be treated as the owner of any portion of a trust, there shall then be included in computing the taxable income and credits of the grantor or the other person those items of income, deductions, and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under this chapter in computing taxable income or credits against the tax of an individual. Any remaining portion of the trust shall be subject to subparts A through D. No items of a trust shall be included in computing the taxable income and credits of the grantor or of any other person solely on the grounds of his dominion and control over the trust under section 61 (relating to definition of gross income) or any other provision of this title, except as specified in this subpart.
Nov 7, 2008 | 3:23 pm
FlyerTalk Evangelist
Join Date: Nov 2006
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Nov 7, 2008 | 3:23 pm
FlyerTalk Evangelist
Join Date: Feb 2007
Location: Los Angeles / Basel
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Posts: 27,094
When the world hits your eyes like a big pizza pie.
Nov 7, 2008 | 3:23 pm
FlyerTalk Evangelist
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22904 737-2H4 Southwest Airlines 10/09/1982 N89SW Stored
first flight the day after my birthday
first flight the day after my birthday
Nov 7, 2008 | 3:23 pm
FlyerTalk Evangelist
Join Date: Aug 2005
Location: DCA
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Foreign trusts are interesting.