[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: 26CFR1.666(b)-1]

[Page 197]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.666(b)-1  Total taxes deemed distributed.

    (a) If an accumulation distribution is deemed under Sec. 1.666(a)-1 
to be distributed on the last day of a preceding taxable year and the 
amount is not less than the undistributed net income for such preceding 
taxable year, then an additional amount equal to the ``taxes imposed on 
the trust'' (as defined in Sec. 1.665(d)-1) for such preceding taxable 
year is likewise deemed distributed under section 661(a)(2). For 
example, a trust has taxable income of $11,032 (not including any 
capital gains) and undistributed net income of $8,000 for the taxable 
year 1954. The taxes imposed on the trust are $3,032. During the taxable 
year 1955, an accumulation distribution of $8,000 is made to the 
beneficiary, which is deemed under Sec. 1.666(a)-1 to have been 
distributed on the last day of 1954. The taxes imposed on the trust for 
1954 of $3,032 are also deemed to have been distributed on the last day 
of 1954 since the 1955 accumulation distribution is not less than the 
1954 undistributed net income. Thus, a total of $11,032 will be deemed 
to have been distributed on the last day of 1954 because of the 
accumulation distribution of $8,000 made in 1955.
    (b) For the purpose of paragraph (a) of this section, the 
undistributed net income of any preceding taxable year is computed 
without regard to the accumulation distribution of the taxable year or 
any taxable year following such taxable year. However, any accumulation 
distribution of taxable years intervening between such preceding taxable 
year and the taxable year are taken into account. See paragraph (d) of 
Sec. 1.666(a)-1 and paragraphs (f)(5) and (g)(1) of Sec. 1.668(b)-2.

[T.D. 6500, 25 FR 11814, Nov. 26, 1960, as amended by T.D. 6989, 34 FR 
741, Jan. 17, 1969]