[Code of Federal Regulations]
[Title 26, Volume 8]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.643(a)-5]

[Page 57]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.643(a)-5  Tax-exempt interest.

    (a) There is included in distributable net income any tax-exempt 
interest excluded from gross income under section 103, reduced by 
disbursements allocable to such interest which would have been 
deductible under section 212 but for the provisions of section 265 
(relating to disallowance of deductions allocable to tax-exempt income).
    (b) If the estate or trust is allowed a charitable contributions 
deduction under section 642(c), the amounts specified in paragraph (a) 
of this section and Sec. 1.643(a)-6 are reduced by the portion deemed 
to be included in income paid, permanently set aside, or to be used for 
the purposes specified in section 642(c). If the governing instrument 
specifically provides as to the source out of which amounts are paid, 
permanently set aside, or to be used for such charitable purposes, the 
specific provisions control. In the absence of specific provisions in 
the governing instrument, an amount to which section 642(c) applies is 
deemed to consist of the same proportion of each class of the items of 
income of the estate or trust as the total of each class bears to the 
total of all classes. For illustrations showing the determination of the 
character of an amount deductible under section 642(c), see examples 1 
and 2 of Sec. 1.662(b)-2 and paragraph (e) of Sec. 1.662(c)-4.