[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: 26CFR1.681(a)-1]

[Page 322]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.681(a)-1  Limitation on charitable contributions deductions of 
trusts; scope of section 681.

    Under section 681, the unlimited charitable contributions deduction 
otherwise allowable to a trust under section 642(c) is, in general, 
subject to percentage limitations, corresponding to those applicable to 
contributions by an individual under section 170(b)(1) (A) and (B), 
under the following circumstances;
    (a) To the extent that the deduction is allocable to ``unrelated 
business income'';
    (b) For taxable years beginning before January 1, 1970, if the trust 
has engaged in a prohibited transaction;
    (c) For taxable years beginning before January 1, 1970, if income is 
accumulated for a charitable purpose and the accumulation is (1) 
unreasonable, (2) substantially diverted to a noncharitable purpose, or 
(3) invested against the interests of the charitable beneficiaries.

Further, if the circumstance set forth in paragraph (a) or (c) of this 
section is applicable, the deduction is limited to income actually paid 
out for charitable purposes, and is not allowed for income only set 
aside or to be used for those purposes. If the circumstance set forth in 
paragraph (b) of this section is applicable, deductions for 
contributions to the trust may be disallowed. The provisions of section 
681 are discussed in detail in Sec. Sec. 1.681(a)-2 through 1.681(c)-1. 
For definition of the term ``income'', see section 643(b) and Sec. 
1.643(b)-1.

[T.D. 6500, 25 FR 11814, Nov. 26, 1960, as amended by T.D. 7428, 41 FR 
34627, Aug. 16, 1976]