[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: 26CFR1.669(f)-1A]

[Page 228-229]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.669(f)-1A  Character of capital gain.

    Amounts distributed as a capital gain distribution and the taxes 
attributable thereto (determined under Sec. 1.665(d)-1A(c)) retain the 
character that the gain had with respect to the trust. Thus, a capital 
gain that was taxed to the trust as a ``long-term'' capital gain and the 
pro rata amount of taxes attributable to such long-term gain shall be 
treated to the beneficiary as a ``long-term'' capital gain when they are 
deemed distributed as part of

[[Page 229]]

a capital gain distribution. If a trust has different types of capital 
gain for the same taxable year, and all of the capital gains are not 
deemed distributed for such year under section 669(a), the amount deemed 
distributed from such year (including taxes deemed distributed) shall be 
treated as consisting of the different types of gains in the ratio that 
the total of each such type of gains of the trust bears to the total of 
all such gains for the taxable year. For example, assume that in 1975 a 
trust had net long-term capital gains of $4,000 and net short-term 
capital gains of $2,000. Taxes attributable to such undistributed 
capital gain were $700. Therefore, undistributed capital gain for 1975 
is $5,300. In 1980, the trust distributes $2,650 that is deemed to be 
undistributed capital gain from 1975. Such distribution is deemed to 
consist of long-term gain of $1,766.67 and short-term gain of $883.33. 
The taxes deemed distributed of $350 consist of long-term gain of 
$233.33 and short-term gain of $116.67.

[T.D. 7204, 37 FR 17157, Aug. 25, 1972]