[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: 26CFR1.665(a)-0]

[Page 178-179]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.665(a)-0  Excess distributions by trusts; scope of subpart D.

    Subpart D (section 665 and following), part I, subchapter J, chapter 
1 of the Internal Revenue Code, in the case of trusts other than foreign 
trusts created by U.S. persons, is designed generally to prevent a shift 
of tax burden to a trust from a beneficiary or beneficiaries. In the 
case of a foreign trust created by a U.S. person, subpart D is designed 
to prevent certain other tax avoidance possibilities. To accomplish 
these ends, subpart D provides special rules for treatment of amounts 
paid, credited, or required to be distributed by a complex trust 
(subject to subpart C (section 661 and following) of such part I) in any 
year in excess of distributable net income for that year. Such an excess 
distribution is defined as an accumulation distribution, subject to the 
limitations in section 665 (b) or (c). An accumulation distribution, in 
the case of a trust other than a foreign trust created by a U.S. person, 
is ``thrown back'' to each of the 5 preceding years in inverse order. In 
the case of a foreign trust created by a U.S.

[[Page 179]]

person such an accumulation distribution is ``thrown back,'' in inverse 
order, to each of the preceding years to which the Internal Revenue Code 
of 1954 applies. That is, an accumulation distribution will be taxed to 
the beneficiaries of the trust in the year the distribution is made or 
required, but, in general, only to the extent of the distributable net 
income of those years which was not in fact distributed. However, with 
respect to a distribution by a trust other than a foreign trust created 
by a U.S. person, the resulting tax will not be greater than the 
aggregate of the taxes that would have been attributable to the amount 
thrown back to previous years had they been included in gross income of 
the beneficiaries in those years. In the case of a foreign trust created 
by a U.S. person, the resulting tax is computed under the provisions of 
section 669. To prevent double taxation, both in the case of a foreign 
trust created by a U.S. person, and a trust other than a foreign trust 
created by a U.S. person, the beneficiaries receive a credit for any 
taxes previously paid by the trust which are attributable to the excess 
thrown back and which are creditable under the provisions of chapter 1 
of the Internal Revenue Code. Subpart D does not apply to any estate.

[T.D. 6989, 34 FR 733, Jan. 17, 1969]