[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(c)-1]

[Page 184-185]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.665(c)-1  Accumulation distributions of certain foreign trusts; 
in general.

    (a) In the case of a foreign trust created by a U.S. person, the 
term accumulation distribution for any taxable year means an amount by 
which the amounts properly paid, credited, or required to be distributed 
within the meaning of section 661(a)(2) for that year exceed the 
distributable net income (determined under section 643(a)) of the trust, 
reduced (but not below zero) by the amount of income required to be 
distributed currently. (In computing the amount of an accumulation 
distribution pursuant to the preceding sentence, there is taken into 
account amounts applied or distributed for the support of a dependent 
under circumstances specified in section 677(b) and section 678(c) out 
of corpus or out of other than income for the taxable

[[Page 185]]

year and amounts used to discharge or satisfy any person's legal 
obligation as that term is used in Sec. 1.662(a)-4.)
    (b) Although amounts properly paid, credited, or required to be 
distributed under section 661(a)(2) do not exceed the income of the 
trust during the taxable year, an accumulation distribution may result 
if such amounts exceed distributable net income reduced (but not below 
zero) by the amount required to be distributed currently. This may 
result from the fact that expenses allocable to corpus are taken into 
account in determining taxable income and hence distributable net 
income. However, the provisions of subpart D will not apply unless there 
is undistributed net income in at least one of the preceding taxable 
years which began after December 31, 1953, and ended after August 16, 
1954. See section 666 and the regulations thereunder.
    (c) The provisions of paragraphs (a) and (b) of this section may be 
illustrated by the examples provided in paragraph (c) of Sec. 1.665(b)-
1.

[T.D. 6989, 34 FR 735, Jan. 17, 1969]