986
26 USC 665.
PUBLIC LAW 87-834-OCT. 16, 1962
[76 STAT.
a trust (other than a foreign trust created by a United States person),", (2) Section 665 is amended by redesignating subsections (c) and (d) as (d) and (e), respectively, and by inserting after subsection (b) the following new subsection: "(c) ACCUMULATION DISTRIBUTION or CERTAIN FOREIGN TRUSTS.—
For purposes of this subpart, in the case of a foreign trust created by a United States person, the term 'accumulation distribution' for any taxable year of the trust means the amount by which the amounts specified in paragraph (2) of section 661(a) for such taxable year exceed distributable net income, reduced by the amounts specified in paragraph (1) of section 661(a). For purposes of this subsection, the amount specified in paragraph (2) of section 661(a) shall be determined without regard to section 666. Any amount paid to a United States person which is from a payor who is not a United States person and which is derived directly or indirectly from a foreign trust created by a United States person shall be deemed in the year of payment to have been directly paid by the for e i ^ trust." (c)
26 USC 666.
ALLOCATION OF ACCUMULATION DISTRIBUTIONS TO PRECEDING
YEARS.—Section 666(a) (relating to accumulation distribution allocated to 5 preceding years) is amended— (1) by striking out " (a) AMOUNT ALLOCATED.—In the case of a trust" and inserting in lieu thereof the following: " (a) AMOUNT ALLOCATED.—In the case of a trust (other than a foreign trust created by a United States person)"; and (2) by adding at the end thereof the following new sentence: " I n the case of a foreign trust created by a United States person, this subsection shall apply to the preceding taxable years of the trust without regard to any provision of the preceding sentences which would (but for this sentence) limit its application to the 5 preceding taxable years." (d) AMOUNTS TREATED AS RECEn^) I N PRIOR YEARS.—Section 668
(a) (relating to amounts treated as received in prior taxable years) is amended by adding at the end thereof the following new sentence: "Except as provided in section 669, in the case of a foreign trust created by a United States person the preceding sentence shall not apply to any beneficiary who is a United States person." (e) SPECIAL RULES FOR FOREIGN TRUSTS.—Subpart D of part I of 26 USC 665-668. Subchapter J of chapter 1 (relating to treatment of excess distributions by trusts) is amended by adding at the end thereof the following new section: •
- SEC. 669. SPECIAL RULES APPLICABLE TO CERTAIN FOREIGN
TRUSTS. " (a) LIMITATION ON T A X. — "(1) GENERAL RULE.—At
Post, p. 988.
Supra.
the election of a beneficiary who is a United States person (as defined in section 7701(a) (30)) and who satisfies the requirements of subsection (b), the tax attributable to the amounts treated under section 668(a) as having been received by him from a foreign trust created by a United States person on the last day of a preceding taxable year of the trust shall not be greater than— " (A) the tax determined under the next to the last sentence of section 668(a), or " (B) the tax determined by multiplying by the number of preceding taxable years of the trust, on the last day of each of which an amount is deemed under section 666(a) to have been distributed, the average of the increase in tax attributable to recomputing the beneficiary's gross income for the taxable year and each of his 2 taxable years immediately preceding
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