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TITLE 26-INTERNAL REVENUE CODE tion (d) [to the analysis preceding section 31, and sec- tions 35, 37, 46, 116(c)(3), 584, 642, 702, 854, 857, 871, 1375 and 6014 of this title] shall apply with respect to dividends received after December 31, 1964, in taxable years ending after such date." EFrEcTivE DATE OF 1962 ALmmMENr Amendment of subsec. e) of this section by Pub. L. 87-834 applicable to taxable years beginning after Dec. 31, 1961, and ending after Oct. 16, 1962, see section 13(g) of Pub. L. 87-834, set out as an Effective Date note under section 1245 of this title. CRoss REYmENcxs Deductions- Estates and trusts accumulating income or distrib- uting corpus, see section 661 of this title. Trusts distributing current income only, see sec- tion 651 of this title. Value of gross estate, see section 2053 et seq. of this title. Limitation on charitable deductions, see section 681 of this title. Returns by trust claiming charitable deduction under subsection c) of this section, see section 6034 of this title. SECTION REFERRD TO IN OTmE SECTIONS This section is referred to in sections 57, 153, 170, 218, 507, 508. 542, 643, 644, 651, 661, 662, 663. 681, 683, 901, 904, 2055, 2522, 4947, 4948, 6034 of this title. § 643. Definitions applicable to subparts A, B, C, and D (a) Distributable net income For purposes of this part, the term "distribu- table net income" means, with respect to any taxable year, the taxable income of the estate or trust computed with the following modifica- tions- (1) Deduction for distributions No deduction shall be taken under sections 651 and 661 (relating to additional deduc- tions). (2) Deduction for personal exemption No deduction shall be taken under section 642(b) (relating to deduction for personal ex- emptions). (3) Capital gains and losses Gains from the sale or exchange of capital assets shall be excluded to the extent that such gains are allocated to corpus and are not (A) paid, credited, or required to be distribut- ed to any beneficiary during the taxable year, or (B) paid, permanently set aside, or to be used for the purposes specified in section 642(c). Losses from the sale or exchange of capital assets shall be excluded, except to the extent such losses are taken into account in determining the amount of gains from the sale or exchange of capital assets which are paid, credited, or required to be distributed to any beneficiary during the taxable year. The deduction under section 1202 (relating to de- duction for excess of capital gains over capital losses) shall not be taken into account. (4) Extraordinary dividends and taxable stock divi- dends For purposes only of subpart B (relating to trusts which distribute current income only), there shall be excluded those Items of gross income constituting extraordinary dividends or taxable stock dividends which the fidu- clary, acting in good faith, does not pay or credit to any beneficiary by reason of his de- termination that such dividends are allocable to corpus under the terms of the governing instrument and applicable local law. (5) Tax-exempt interest There shall be included any tax-exempt In- terest to which section 103 applies, reduced by any amounts which would be deductible In respect of disbursements allocable to such in- terest but for the provisions of section 265 (relating to disallowance of certain deduc- tions). (6) Income of foreign trust In the case of a foreign trust- (A) There shall be included the amounts of gross income from sources without the United States, reduced by any amounts which would be deductible in respect of dis- bursements allocable to such income but for the provisions of section 265(1) (relating to disallowance of certain deductions). (B) Gross income from sources within the United States shall be determined without regard to section 894 (relating to Income exempt under treaty). (C) Paragraph (3) shall not apply to a for- eign trust. In the case of such a trust, (I) there shall be included gains from the sale or exchange of capital assets, reduced by losses from such sales or exchanges to the extent such losses do not exceed gains from such sales or exchanges, and (ii) the deduc- tion under section 1202 (relating to deduc- tion for excess of capital gains over capital losses) shall not be taken into account. (D) Effective for distributions made in taxable years beginning after December 31, 1975, the undistributed net income of each foreign trust for each taxable year begin- ning on or before December 31, 1975, re- maining undistributed at the close of the last taxable year beginning on or before De- cember 31, 1975, shall be redetermined by taking Into account the deduction allowed by section 1202, (7) Dividends There shall be included the amount of any dividends excluded from gross income pursu- ant to section 116 (relating to partial exclu- sion of dividends received). If the estate or trust is allowed a deduction under section 642(c), the amount of the modifi- cations specified in paragraphs (5) and (6) shall be reduced to the extent that the amount of income which is paid, permanently set aside, or to be used for the purposes specified in section 642(c) is deemed to consist of items specified in those paragraphs. For this purpose, such amount shall (in the absence of specific provi- sions in the governing Instrument) be deemed to consist of the same proportion of each class of items of income of the estate or trust as the total of each class bears to the total of all classes. (b) Income For purposes of this subpart and subparts B, C, and D, the term "income", when not preced- ed by the words "taxable", "distributable net", "undistributed net", or "gross", means the Page 462 § 643