26 U.S.
Code § 661 - Deduction for estates and trusts accumulating income or
distributing corpus
(a) Deduction
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 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.
(c) Limitation on deduction
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.
