Frequently Asked Questions
Who is eligible for the Deduction for Complex Trust and Estate Distributions?
Available to estates and trusts that accumulate income or distribute corpus when they make distributions to beneficiaries.
How does the Deduction for Complex Trust and Estate Distributions work?
Allows estates and complex trusts to deduct amounts properly paid, credited, or required to be distributed to beneficiaries, up to the limit of distributable net income.
What law authorizes the Deduction for Complex Trust and Estate Distributions?
The Deduction for Complex Trust and Estate Distributions is authorized under IRC §661 of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §661
Source: Internal Revenue Code, Title 26, United States Code
§ 661. Deduction for estates and trusts accumulating income or distributing corpus(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 distributedThe 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 deductionNo 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.)
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