[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(d)-1A]

[Page 193-194]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.666(d)-1A  Information required from trusts.

    (a) Adequate records required. For all taxable years of a trust, the 
trustee must retain copies of the trust's income tax return as well as 
information pertaining to any adjustments in the tax shown as due on the 
return. The trustee shall also keep the records of the trust required to 
be retained by section 6001 and the regulations thereunder for each 
taxable year as to which the period of limitations on assessment of tax 
under section 6501 has not expired. If the trustee fails to produce such 
copies and records, and such failure is due to circumstances beyond the 
reasonable control of the trustee or any predecessor trustee, the 
trustee may reconstruct the amount of corpus, accumulated income, etc., 
from competent sources (including, to the extent permissible, Internal 
Revenue Service records). To the extent that an accurate reconstruction 
can be made for a taxable year, the requirements of this paragraph shall 
be deemed satisfied for such year.
    (b) Rule when information is not available--(1) Accumulation 
distributions. If adequate records (as required by paragraph (a) of this 
section) are not available to determine the proper application of 
subpart D to an accumulation distribution made in a taxable year by a 
trust, such accumulation distribution shall be deemed to consist of 
undistributed net income earned during the earliest preceding taxable 
year (as defined in Sec. 1.665(e)-1A) of the trust in which it can be 
established that the trust was in existence. If adequate records are 
available for some years, but not for others, the accumulation 
distribution shall be allocated first to the earliest preceding taxable 
year of the trust for which there are adequate records and then to each 
subsequent preceding taxable year for which there are adequate records. 
To the extent that the distribution is not allocated in such manner to 
years for which adequate records are available, it will be deemed 
distributed on the last day of the earliest preceding taxable year of 
the trust in which it is established that the trust was in existence and 
for which the trust has no records. The provisions of

[[Page 194]]

this subparagraph may be illustrated by the following example:

    Example. A trust makes a distribution in 1975 of $100,000. The 
trustee has adequate records for 1973, 1974, and 1975. The records show 
that the trust is on the calendar year basis, had distributable net 
income in 1975 of $20,000, and undistributed net income in 1974 of 
$15,000, and in 1973 of $16,000. The trustee has no other records of the 
trust except for a copy of the trust instrument showing that the trust 
was established on January 1, 1965. He establishes that the loss of the 
records was due to circumstances beyond his control. Since the 
distribution is made in 1975, the earliest ``preceding taxable year'', 
as defined in Sec. 1.665(e)-1A, is 1969. Since $80,000 of the 
distribution is an accumulation distribution, and $31,000 thereof is 
allocated to 1974 and 1973, $49,000 is deemed to have been distributed 
on the last day of 1969.

    (2) Taxes. (i) If an amount is deemed under this paragraph to be 
undistributed net income allocated to a preceding taxable year for which 
adequate records are not available, there shall be deemed to be ``taxes 
imposed on the trust'' for such preceding taxable year an amount equal 
to the taxes that the trust would have paid if the deemed undistributed 
net income were the amount remaining when the taxes were subtracted from 
taxable income of the trust for such year. For example, assume that an 
accumulation distribution in 1975 of $100,000 is deemed to be 
undistributed net income from 1971, and that the taxable income required 
to produce $100,000 after taxes in 1971 would be $284,966. Therefore the 
amount deemed to be ``taxes imposed on the trust'' for such preceding 
taxable year is $184,966.
    (ii) The credit allowed by section 667(b) shall not be allowed for 
any amount deemed under this subparagraph to be ``taxes imposed on the 
trust.''

[T.D. 7204, 37 FR 17146, Aug. 25, 1972]