[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: 26CFR1.651(b)-1]

[Page 98]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.651(b)-1  Deduction for distributions to beneficiaries.

    In computing its taxable income, a simple trust is allowed a 
deduction for the amount of income which is required under the terms of 
the trust instrument to be distributed currently to beneficiaries. If 
the amount of income required to be distributed currently exceeds the 
distributable net income, the deduction allowable to the trust is 
limited to the amount of the distributable net income. For this purpose 
the amount of income required to be distributed currently, or 
distributable net income, whichever is applicable, does not include 
items of trust income (adjusted for deductions allocable thereto) which 
are not included in the gross income of the trust. For determination of 
the character of the income required to be distributed currently, see 
Sec. 1.652(b)-2. Accordingly, for the purposes of determining the 
deduction allowable to the trust under section 651, distributable net 
income is computed without the modifications specified in paragraphs 
(5), (6), and (7) of section 643(a), relating to tax-exempt interest, 
foreign income, and excluded dividends. For example: Assume that the 
distributable net income of a trust as computed under section 643(a) 
amounts to $99,000 but includes nontaxable income of $9,000. Then 
distributable net income for the purpose of determining the deduction 
allowable under section 651 is $90,000 ($99,000 less $9,000 nontaxable 
income).