[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: 26CFR1.676(b)-1]

[Page 303]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.676(b)-1  Powers exercisable only after a period of time.

    Section 676(b) provides an exception to the general rule of section 
676(a) when the exercise of a power can only affect the beneficial 
enjoyment of the income of a trust received after the expiration of a 
period of time which is such that a grantor would not be treated as the 
owner of that portion, except as power were a reversionary interest. See 
Sec. Sec. 1.673(a)-1 and 1.673(b)-1. Thus, for example, a grantor is 
excepted from the general rule of section 676(a) with respect to 
ordinary income if exercise of a power to revest corpus in him cannot 
affect the beneficial enjoyment of the income received within 10 years 
after the date of transfer of that portion of the trust. It is 
immaterial for this purpose that the power is vested at the time of the 
transfer. However, the grantor is subject to the general rule of section 
676(a) after the expiration of the period unless the power is 
relinquished. Thus, in the above example, the grantor may be treated as 
the owner and be taxed on all income in the eleventh and succeeding 
years if exercise of the power can affect beneficial enjoyment of income 
received in those years. If the beginning of the period during which the 
grantor may revest is postponed, the rules set forth in Sec. 1.673(d)-1 
are applicable to determine whether the grantor should be treated as an 
owner during the period following the postponement.