[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: 26CFR1.668(a)-1]

[Page 211]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.668(a)-1  Amounts treated as received in prior taxable years; 
inclusion in gross income.

    (a) Section 668(a) provides that the total of the amounts treated 
under section 666 as having been distributed by the trust on the last 
day of a preceding taxable year of the trust shall be included in the 
gross income of the beneficiary or beneficiaries receiving them. The 
total of such amounts is includible in the gross income of each 
beneficiary to the extent the amounts would have been included under 
section 662 (a)(2) and (b) if the total had actually been paid by the 
trust on the last day of such preceding taxable year. The total is 
included in the gross income of the beneficiary for the taxable year of 
the beneficiary in which such amounts are in fact paid, credited, or 
required to be distributed unless the taxable year of the beneficiary 
differs from the taxable year of the trust (see section 662(c) and the 
regulations thereunder). The character of the amounts treated as 
received by a beneficiary in prior taxable years, including taxes deemed 
distributed, in the hands of the beneficiary is determined by the rules 
set forth in section 662(b) and the regulations thereunder. See 
paragraphs (h)(1)(ii) and (j)(1)(ii) of Sec. 1.668(b)-2.
    (b) The total of the amounts treated under section 666 as having 
been distributed by the trust on the last day of a preceding taxable 
year of the trust are included as prescribed in paragraph (a) of this 
section in the gross income of the beneficiary even though as of that 
day the beneficiary would not have been entitled to receive them had 
they actually been distributed on that day.
    (c) Any deduction allowed to the trust in computing distributable 
net income for a preceding taxable year (such as depreciation, 
depletion, etc.) is not deemed allocable to a beneficiary because of 
amounts included in a beneficiary's gross income under this section 
since the deduction has already been utilized in reducing the amount 
included in the beneficiary's income.