The application of the provisions of §§ 1.666(a)-1 , 1.666(b)-1 , and 1.666(c)-1 may be illustrated by the following examples:
1959$7,000
196025,000
For 1954 through 1958, the undistributed portion of distributable net income taxes imposed on the trust, and undistributed net income are as follows:
Year | Undistributed portion of distributable net income | Taxes imposed on the trust | Undistributed net income |
1958 | $12,100 | $3,400 | $8,700 |
1957 | 16,100 | 5,200 | 10,900 |
1956 | 6,100 | 1,360 | 4,740 |
1955 | None | None | None |
1954 | 10,100 | 2,640 | 7,460 |
Undistributed portion of distributable net income as of the close of 1958 | $12,100 | |
Less: | ||
Accumulation distribution (1959) | $7,000 | |
Taxes deemed distributed under section 666(c) (7,000/8,700 * $3,400) | 2,736 | |
9,736 | ||
Balance (undistributed portion of distributable net income as of the close of 1959) | 2,364 | |
Less: Personal exemption | 100 | |
Balance | 2,264 | |
Taxes imposed on the trust (income taxes on $2,264) | 458 | |
Undistributed portion of distributable net income as of the close of 1959 | 2,364 | |
Less: Income taxes attributable thereto | 458 | |
Undistributed net income for 1958 as of the close of 1959 | 1,906 |
Year | Undistributed net income | Taxes imposed on the trust |
1959 | None | None |
1958 | $1,906 | $458 |
1957 | 10,900 | 5,200 |
1956 | 4,740 | 1,360 |
1955 | None | None |
Distributable net income | $20,100 |
Less: Taxes imposed on the trust | 7,260 |
Undistributed net income as of the close of 1954 | 12,840 |
Accumulation distribution | $6,420 |
Taxes deemed distributed (6,420/ 12,840 * $7,260) | 3,630 |
Total | 10,050 |
Distributable net income as of the close of 1954 | $20,100 |
Less: 1955 accumulation distribution and taxes deemed distributed on December 31, 1954 (paragraph (c) of this example) | 10,050 |
Undistributed portion of the 1954 distributable net income adjusted as of the close of 1955 | 10,050 |
Less: Personal exemption | 100 |
Balance | 9,950 |
Income taxes on $9,950 | 2,623 |
Undistributed portion of distributable net income as of the close of 1955 | $10,050 |
Less: Income taxes applicable thereto | 2,623 |
Undistributed net income determined as of the close of 1955 | 7,427 |
Accumulation distribution | $6,420 |
Taxes deemed distributed (6,420/ 7,427 * $2,623) | 2,267 |
Total | 8,687 |
Undistributed portion of distributable net income as of the close of 1955 | $10,050 |
Less: 1956 accumulation distribution and taxes deemed distributed on December 31, 1954 (paragraph (f) of this example) | 8,687 |
Undistributed portion of distributable net income as of the close of 1956 | 1,363 |
Less: Personal exemption | 100 |
Balance | 1,263 |
Income taxes on $1,263 | 253 |
26 C.F.R. §1.666(c)-2