[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: 26CFR1.672(d)-1]

[Page 285]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.672(d)-1  Power subject to condition precedent.

    Section 672(d) provides that a person is considered to have a power 
described in subpart E (section 671 and following), part I, subchapter 
J, chapter 1 of the Code, even though the exercise of the power is 
subject to a precedent giving of notice or takes effect only after the 
expiration of a certain period of time. However, although a person may 
be considered to have such a power, the grantor will nevertheless not be 
treated as an owner by reason of the power if its exercise can only 
affect beneficial enjoyment of income received after the expiration of a 
period of time such that, if the power were a reversionary interest, he 
would not be treated as an owner under section 673. See sections 
674(b)(2), 676(b), and the last sentence of section 677(a). Thus, for 
example, if a grantor creates a trust for the benefit of his son and 
retains a power to revoke which takes effect only after the expiration 
of 2 years from the date of exercise, he is treated as an owner from the 
inception of the trust. However, if the grantor retains a power to 
revoke, exercisable at any time, which can only affect the beneficial 
enjoyment of the ordinary income of a trust received after the 
expiration of 10 years commencing with the date of the transfer in 
trust, or after the death of the income beneficiary, the power does not 
cause him to be treated as an owner with respect to ordinary income 
during the first 10 years of the trust or during the income 
beneficiary's life, as the case may be. See section 676(b).