Nonrecognition of Gain on CTF to RIC Transfers

§ 584. Common trust funds(a) DefinitionsFor purposes of this subtitle, the term “common trust fund” means a fund maintained by a bank—(1) exclusively for the collective investment and reinvestment of moneys contributed thereto by the bank in its capacity—(A) as a trustee, executor, administrator, or guardian, or (B) as a custodian of accounts—(i) which the Secretary determines are established pursuant to a State law which is substantially similar to the Uniform Gifts to Minors Act as published by the American Law Institute, and (ii) with respect to which the bank establishes, to the satisfaction of the Secretary, that it has duties and responsibilities similar to duties and responsibilities of a trustee or guardian; and (2) in conformity with the rules and regulations, prevailing from time to time, of the Board of Governors of the Federal Reserve System or the Comptroller of the Currency pertaining to the collective investment of trust funds by national banks. For purposes of this subsection, two or more banks which are members of the same affiliated group (within the meaning of section 1504) shall be treated as one bank for the period of affiliation with respect to any fund of which any of the member banks is trustee or two or more of the member banks are cotrustees. (b) Taxation of common trust fundsA common trust fund shall not be subject to taxation under this chapter and for purposes of this chapter shall not be considered a corporation. (c) Income of participants in fundEach participant in the common trust fund in computing its taxable income shall include, whether or not distributed and whether or not distributable—(1) as part of its gains and losses from sales or exchanges of capital assets held for not more than 1 year, its proportionate share of the gains and losses of the common trust fund from sales or exchanges of capital assets held for not more than 1 year, (2) as part of its gains and losses from sales or exchanges of capital assets held for more than 1 year, its proportionate share of the gains and losses of the common trust fund from sales or exchanges of capital assets held for more than 1 year, and (3) its proportionate share of the ordinary taxable income or the ordinary net loss of the common trust fund, computed as provided in subsection (d). The proportionate share of each participant in the amount of dividends received by the common trust fund and to which section 1(h)(11) applies shall be considered for purposes of such paragraph as having been received by such participant. (d) Computation of common trust fund incomeThe taxable income of a common trust fund shall be computed in the same manner and on the same basis as in the case of an individual, except that—(1) there shall be segregated the gains and losses from sales or exchanges of capital assets;