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TITLE 26-INTERNAL REVENUE CODE percent of the net fair market value of its assets (or a greater amount, If required under the terms of the trust instrument) is to be dis- tributed each year. (Added Pub. L. 91-172, title II, § 201(e)(1), Dec. 30, 1969, 83 Stat. 562, and amended Pub. L. 94- 455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) AMENDMEntS 1976-Subset. (a). Pub. L. 94-455 struck out "or his delegate" following "secretary". EFFECTIVE DATE Section applicable to transfers In trust made after July 31, 1969, see section 201(g)(5), set out as an Effec- tive Date of 1969 Amendment note under section 170 of this title. SECTIcN RzuED TO IN OTMM SECTIONS This section is referred to in sections 170, 644, 2055, 2522 of this title. SUBPART D-TRATMENT OF EXCESS DISTRIBUTIONS BY TRUSTS Sec. 665. 666. 667. 668. [669. Definitions applicable to subpart D. Accumulation distribution allocated to preced- ing years. Treatment of amounts deemed distributed by trust in preceding years. Interest charge on accumulation distributions from foreign trusts. Repealed.] AMENDmrmurrs 1976-Pub. L. 94-455, title VII, §701(g)(1), title X, § 1014(c), Oct. 4, 1976, P0 Stat. 1580, 1617, substituted in item 667 "Treatmer.. of amounts deemed distribut- ed by trust in preceding years" for "Deniaj of refund to trusts: authorization of credit to beneficiaries", in item 668 "Interest charge on accumulation distribu- tions from foreign trusts" for "Treatment of amounts deemed distributed in preceding years", and struck out Item 669 "Treatment of capital gain deemed distribut- ed in preceding years". 1969-Pub. L. 91-172, title III, §331(a), Dec. 30, 1969, 83 Stat. 592, deleted "5" following "allocated to" in item 666, inserted "authorization of credit to benefi- ciaries" in item 667, and substituted "Treatment of capital gain deemed distributed in preceding years" for "Special rules applicable to certain foreign trusts" in item 669. 1962-Pub. L. 87-834, §7()(1), Oct. 16, 1962, 76 Stat. 988, added item 669. SUBPART RzMMns TO IN OTHER SECTIONS This subpart is referred to in section 671 of this title. § 665. Definitions applicable to subpart D (a) Undistributed net income For purposes of this subpart, the term "undis- tributed net income" for any taxable year means the amount by which distributable net income of the trust for such taxable year ex- ceeds the sum of- (1) the amounts for such taxable year speci- fied in paragraphs (1) and (2) of section 661(a), and (2) the amount of taxes imposed on the trust attributable to such distributable net income. (b) Accumulation distribution For purposes of this subpart, the term "accu- mulation distribution" means, for any taxable year of the trust, the amount by which- (1) the amounts specified in paragraph (2) of section 661(a) for such taxable year, exceed (2) distributable net income for such year reduced (but not below zero) by the amounts specified in paragraph (1) of section 661(a). For purposes of section 667 (other than subsec- tion (c) thereof, relating to multiple trusts), the amounts specified in paragraph (2) of section 661(a) shall not include amounts properly paid, credited, or required to be distributed to a bene- ficiary from a trust (other than a foreign trust) as income accumulated before the birth of such beneficiary or before such beneficiary attains the age of 21. If the amounts properly paid, credited, or required to be distributed by the trust for the taxable year do not exceed the income of the trust for such year, there shall be no accumulation distribution for such year. (c) Special rule applicable to distributions by certain foreign trusts For purposes of this subpart, any amount paid to a United States person which is from a payor who is not a United States person and which is derived directly or indirectly from a foreign trust created by a United States person shall be deemed in the year of payment to have been directly paid by the foreign trust. (d) Taxes imposed on the trust For purposes of this subpart, the term "taxes imposed on the trust" means the amount of the taxes which are imposed for any taxable year of the trust under this chapter (without regard to this subpart) and which, under regulations prescribed by the Secretary, are properly allo- cable to the undistributed portions of distribu- table net income and gains in excess of losses from sales or exchanges of capital assets. The amount determined in the preceding sentence shall be reduced by any amount of such taxes deemed distributed under section 666(b) and (c) or 669(d) and (e) to any beneficiary. (e) Preceding taxable year For purposes of this subpart- (1) in the case of a trust (other than a for- eign trust created by a United States person), the term "preceding taxable year" does not include any taxable year of the trust- (A) which precedes by more than 5 years the taxable year of the trust in which an ac- cumulation distribution is made, if it Is made in a taxable year beginning before January 1, 1974, or (B) which begins before January 1, 1969, in the case of an accumulation distribution made during a taxable year beginning after Decembr-r 31, 1973, and (2) in t.Le case of a foreign trust created by a United States person, such term does not in- clude any taxable year of the trust to which this part does not apply. In the case of a preceding taxable year with re- spect to which a trust qualifies (without regard to this subpart) under the provisions of subpart B, for purposes of the application of this sub- part to such trust for such taxable year, such trust shall, in accordance with regulations pre- § 665 Page 468