[Code of Federal Regulations]
[Title 26, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.103-5]

[Page 371-372]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.103-5  Treasury bond exemption in the case of trusts or partnerships.

    (a) When the income of a trust is taxable to beneficiaries, as in 
the case of a trust the income of which is to be distributed to the 
beneficiaries currently, each beneficiary is entitled to exemption as if 
he owned directly a proportionate part of the Treasury bonds held in 
trust. When, on the other hand, income is taxable to the trustee, as in 
the case of a trust the income of which is accumulated for the benefit 
of unborn or unascertained persons, the trust, as the owner of the bonds 
held in trust, is entitled to the exemption on account of such 
ownership. In general, see sections 652(b) and 662(b) and the 
regulations thereunder.
    (b) As the income of a partnership is taxable to the individual 
partners, each partner is entitled to exemption as if

[[Page 372]]

he owned directly a proportionate part of the bonds held by the 
partnership. For rules relating to partially tax-exempt interest see 
section 702(a)(7) and the regulations thereunder.