26 U.S.C. § 661

Deduction for estates and trusts accumulating income or distributing corpus

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(a) DeductionIn any taxable year there shall be allowed as a deduction in computing the taxable income of an estate or trust (other than a trust to which subpart B applies), the sum of—(1) any amount of income for such taxable year required to be distributed currently (including any amount required to be distributed which may be paid out of income or corpus to the extent such amount is paid out of income for such taxable year); and(2) any other amounts properly paid or credited or required to be distributed for such taxable year;but such deduction shall not exceed the distributable net income of the estate or trust.(b) Character of amounts distributed

The amount determined under subsection (a) shall be treated as consisting of the same proportion of each class of items entering into the computation of distributable net income of the estate or trust as the total of each class bears to the total distributable net income of the estate or trust in the absence of the allocation of different classes of income under the specific terms of the governing instrument. In the application of the preceding sentence, the items of deduction entering into the computation of distributable net income (including the deduction allowed under section 642(c)) shall be allocated among the items of distributable net income in accordance with regulations prescribed by the Secretary.

No deduction shall be allowed under subsection (a) in respect of any portion of the amount allowed as a deduction under that subsection (without regard to this subsection) which is treated under subsection (b) as consisting of any item of distributable net income which is not included in the gross income of the estate or trust.

(Aug. 16, 1954, ch. 736, 68A Stat. 220; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–248, title III, §§ 302(b)(2), 308(a), Sept. 3, 1982, 96 Stat. 586, 591; Pub. L. 98–67, title I, § 102(a), Aug. 5, 1983, 97 Stat. 369.)Editorial NotesAmendments

1983—Subsec. (a). Pub. L. 98–67 repealed amendments made by Pub. L. 97–248. See 1982 Amendment note below.

1982—Subsec. (a). Pub. L. 97–248 provided that, applicable to payments of interest, dividends, and patronage dividends paid or credited after June 30, 1983, subsec. (a) is amended by inserting at end “For purposes of paragraph (1), the amount of distributable net income shall be computed without the deduction allowed by section 642(c).”. Section 102(a), (b) of Pub. L. 98–67, title I, Aug. 5, 1983, 97 Stat. 369, repealed subtitle A (§§ 301–308) of title III of Pub. L. 97–248 as of the close of June 30, 1983, and provided that the Internal Revenue Code of 1954 (this title) shall be applied and administered (subject to certain exceptions) as if such subtitle A (and the amendments made by such subtitle A) had not been enacted.

1976—Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.

Notes of Decisions

Cited in 17 cases, 1959–1998 · leading case: United California Bank v. United States, 439 U.S. 180 (1978).

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United California Bank v. United States, 439 U.S. 180 (1978). · cites it 2× “"In any taxable year there shall be allowed as a deduction in computing the taxable income of an estate or trust (other than a trust to which subpart B applies), the sum of "(1) any amount of income for such taxable year required to be distributed currently (including any…”

Edward D. Rollert Residuary Trust, Genesee Merchants Bank & Trust Co., Tr. v. Comm'r of Internal Revenue, 752 F.2d 1128 (6th Cir. 1985). “This deduction was made pursuant to 26 U.S.C. § 661 (a)(2), which allows estates to deduct “amounts properly paid or credited or required to be distributed.”

Hay v. United States, 263 F. Supp. 813 (N.D. Tex. 1967). · cites it 2× “26 U.S.C.A. §§ 661 (a) (2), 662. The plaintiffs further contend that the depletion deduction of $300,499.”

L. B. Whitfield, Jr., & Virginia G. Whitfield v. Comm'r of Internal Revenue, 311 F.2d 640 (5th Cir. 1962). “— -In any taxable year there shall be allowed as a deduction in computing the taxable income of an estate or trust (other than a trust to which subpart B applies), the sum of— “(1) any amount of income for such taxable year required to be distributed currently (including any…”

Dominion Trust Co. of Tennessee v. United States, 786 F. Supp. 1321 (M.D. Tenn. 1991). · cites it 3× “” 26 U.S.C. § 661 (a). Under 26 U.S.C. § 662 (a) and 26 C.”

Ruth H. Bohan v. United States, 456 F.2d 851 (8th Cir. 1972). · cites it 2× “The Government contends that 26 U.S.C.A. §§ 661 (a) (2) and 662(a) (2) 2 require this distribution to be included as income by taxpayer and deducted by the estate.”

Williams v. Harrington, 460 So. 2d 533 (Fla. 2d DCA 1984). “See 26 U.S.C. §§ 661 and 662. The result here was that the surviving spouse became liable for taxes on that portion of her distributions equal to the income earned by the estate, even though the estate retained the income.”

Lemle v. United States, 419 F. Supp. 68 (S.D.N.Y. 1976). “, distributions deductible from the estate’s taxable income under 26 U.S.C. § 661 . 2 Plaintiff, for her part, treated the pay *70 ments received by her during those years as distributions drawn from estate principal and thus excludible from gross income under 26 U.”

Midland Nat'l Bank of Billings v. United States, 168 F. Supp. 736 (D. Mont. 1959). · cites it 2× “10 Under the 1954 Internal Revenue Code, the deduction claimed by plaintiff would be allowed ( 26 U.S.C.A. § 661 ). Plaintiff argues that this manifests a Congressional intent “in the drafting of the former amendments of Sec.”

Est. of Walton v. Dept. of Revenue, 579 So. 2d 643 (Ala. Civ. App. 1991). “It reaches this conclusion based on an analogous rationalization between § 40-18-25 (c) and 26 U.S.C. § 661 (1954), the federal counterpart to § 40-18-25 .”

Hopper v. Gov't of the Virgin Islands, 550 F.2d 844 (3rd Cir. 1977). “It analyzed the problem in terms of 26 U.S.C. §§ 661 and 662 and characterized the Government as “sitting in the middle of the two Petitioners, with apron spread wide open.”

Bertha Lemle v. United States, 579 F.2d 185 (2d Cir. 1978). “26 U.S.C. §§ 661 and 662 provide in substance that, if the income which an estate is required to distribute does not exhaust ail of the estate’s distributable income, distributions of principal will be treated as income distributions to the extent of the unexhausted…”

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— 26 U.S.C. § 661(a) — 1 case

Provident Nat'l Bank v. United States, 325 F. Supp. 1187 (E.D. Pa. 1971).

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