[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: 26CFR1.674(c)-1]

[Page 301]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.674(c)-1  Excepted powers exercisable only by independent trustees.

    Section 674(c) provides an exception to the general rule of section 
674(a) for certain powers that are exercisable by independent trustees. 
This exception is in addition to those provided for under section 674(b) 
which may be held by any person including an independent trustee. The 
powers to which section 674(c) apply are powers (a) to distribute, 
apportion, or accumulate income to or for a beneficiary or 
beneficiaries, or to, for, or within a class of beneficiaries, or (b) to 
pay out corpus to or for a beneficiary or beneficiaries or to or for a 
class of beneficiaries (whether or not income beneficiaries). In order 
for such a power to fall within the exception of section 674(c) it must 
be exercisable solely (without the approval or consent of any other 
person) by a trustee or trustees none of whom is the grantor and no more 
than half of whom are related or subordinate parties who are subservient 
to the wishes of the grantor. (See section 672(c) for definitions of 
these terms.) An example of the application of section 674(c) is a trust 
whose income is payable to the grantor's three adult sons with power in 
an independent trustee to allocate without restriction the amounts of 
income to be paid to each son each year. Such a power does not cause the 
grantor to be treated as the owner of the trust. See however, the 
limitations set forth in Sec. 1.674(d)-2.