[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: 26CFR1.662(a)-4]

[Page 108-109]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.662(a)-4  Amounts used in discharge of a legal obligation.

    Any amount which, pursuant to the terms of a will or trust 
instrument, is used in full or partial discharge or satisfaction of a 
legal obligation of any person is included in the gross income of such 
person under section 662(a) (1) or (2), whichever is applicable, as 
though directly distributed to him as a beneficiary, except in cases to 
which

[[Page 109]]

section 71 (relating to alimony payments) or section 682 (relating to 
income of a trust in case of divorce, etc.) applies. The term legal 
obligation includes a legal obligation to support another person if, and 
only if, the obligation is not affected by the adequacy of the 
dependent's own resources. For example, a parent has a ``legal 
obligation'' within the meaning of the preceding sentence to support his 
minor child if under local law property or income from property owned by 
the child cannot be used for his support so long as his parent is able 
to support him. On the other hand, if under local law a mother may use 
the resources of a child for the child's support in lieu of supporting 
him herself, no obligation of support exists within the meaning of this 
paragraph, whether or not income is actually used for support. 
Similarly, since under local law a child ordinarily is obligated to 
support his parent only if the parent's earnings and resources are 
insufficient for the purpose, no obligation exists whether or not the 
parent's earnings and resources are sufficient. In any event the amount 
of trust income which is included in the gross income of a person 
obligated to support a dependent is limited by the extent of his legal 
obligation under local law. In the case of a parent's obligation to 
support his child, to the extent that the parent's legal obligation of 
support, including education, is determined under local law by the 
family's station in life and by the means of the parent, it is to be 
determined without consideration of the trust income in question.