[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)-1A]

[Page 265]
 
                       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)-1A  Special rule applicable to distributions by certain 
foreign trusts.

    (a) In general. Except as provided in paragraph (b) of this section, 
for purposes of section 665 any amount paid to a U.S. person which is 
from a payor who is not a U.S. person and which is derived directly or 
indirectly from a foreign trust created by a U.S. person shall be deemed 
in the year of payment to the U.S. person to have been directly paid to 
the U.S. person by the trust. For example, if a nonresident alien 
receives a distribution from a foreign trust created by a U.S. person 
and then pays the amount of the distribution over to a U.S. person, the 
payment of such amount to the U.S. person represents an accumulation 
distribution to the U.S. person from the trust to the extent that the 
amount received would have been an accumulation distribution had the 
trust paid the amount directly to the U.S. person in the year in which 
the payment was received by the U.S. person. This section also applies 
in a case where a nonresident alien receives indirectly an accumulation 
distribution from a foreign trust created by a U.S. person and then pays 
it over to a U.S. person. An example of such a transaction is one where 
the foreign trust created by a U.S. person makes the distribution to an 
intervening foreign trust created by either a U.S. person or a person 
other than a U.S. person and the intervening trust distributes the 
amount received to a nonresident alien who in turn pays it over to a 
U.S. person. Under these circumstances, it is deemed that the payment 
received by the U.S. person was received directly from a foreign trust 
created by a U.S. person.
    (b) Limitation. In the case of a distribution to a beneficiary who 
is a U.S. person, paragraph (a) of this section does not apply if the 
distribution is received by such beneficiary under circumstances 
indicating lack of intent on the part of the parties to circumvent the 
purposes for which section 7 of the Revenue Act of 1962 (76 Stat. 985) 
was enacted.

[T.D. 7204, 37 FR 17139 Aug. 25, 1972]

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