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TITLE 26-INTERNAL REVENUE CODE SECTION REFERRED TO IN OTIM SECTIONS This section is referred to in sections 672, 678 of this title. § 676. Power to revoke (a) General rule The grantor shall be treated as the owner of any portion of a trust, whether or not he is treated as such owner under any other provi- sion of this part, where at any time the power to revest in the grantor title to such portion is exercisable by the grantor or a non-adverse party, or both. (b) Power affecting beneficial enjoyment only after expiration of 10-year period Subsection (a) shall not apply to a power the exercise of which can only affect the beneficial enjoyment of the income for a period commenc- ing after the expiration of a period such that a grantor would not be treated as the owner under section 673 if the power were a reversion- ary interest. But the grantor may be treated as the owner after the expiration of such period unless the power is relinquished. (Aug. 16, 1954, ch. 736, 68A Stat. 230.) CROSS REFERENCES Nonadverse party defined, see section 672 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 673 of this title. § 677. Income for benefit of grantor (a) General rule The grantor shall be treated as the owner of any portion of a trust, whether or not he is treated as such owner under section 674, whose income without the approval or consent of any adverse party is, or, in the discretion of the grantor or a nonadverse party, or both, may be- (1) distributed to the grantor or the gran- tor's spouse; (2) held or accumulated for future distribu- tion to the grantor or the grantor's spouse; or (3) applied to the payment of premiums on policies of insurance on the life of the grantor or the grantor's spouse (except policies of in- surance irrevocably payable for a purpose specified in section 170(c) (relating to defini- tion of charitable contributions)). This subsection shall not apply to a power the exercise of which can only affect the beneficial enjoyment of the income for a period commenc- ing after the expiration of a period such that the grantor would not be treated as the owner under section 673 if the power were a reversion- ary interest; but the grantor may be treated as the owner after the expiration of the period unless the power is relinquished. (b) Obligations of support Income of a trust shall not be considered tax- able to the grantor under subsection (a) or any other provision of this chapter merely because such income in the discretion of another person, the trustee, or the grantor acting as trustee or co-trustee, may be applied or distrib- uted for the support or maintenance of a bene- ficiary (other than the grantor's spouse) whom the grantor is legally obligated to support or maintain, except to the extent that such income is so applied or distributed. In cases where the amounts so applied or distributed are paid out of corpus or out of other than income for the taxable year, such amounts shall be considered to be an amount paid or credited within the meaning of paragraph (2) of section 661(a) and shall be taxed to the grantor under section 662. (Aug. 16, 1954, ch. 736, 68A Stat. 230; Dec. 30, 1969, Pub. L. 91-172, title III, § 332(a), 83 Stat. 599.) AMENDMENTS 1969-Subsec. (a)(1)-(3). Pub. L. 91-172, § 332(a)(1), inserted "or the grantor's spouse" followin6 "the gran- tor" in pars. (1), (2). and (3). Subsec. (b). Pub. L. 91-172, §332ta)(2), inserted "(other than the grantor's spouse)" following "benefi- ciary". EFrEcTiv. DATE OF 1969 AMENDMENT Section 332(b) of Pub. L. 91-172 provided that: "The amendments made by subsection (a) [to subsecs. (a)(1) to (3) and (b) of this section] shall apply in respect of property transferred in trust after October 9, 1969." CROSS REnacs Definitions- Adverse party, see section 672 of this title. Non-adverse party, see section 672(b) of this title. Income from interest in an estate or trust as gross income. in section 61 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 674, 678, 1246 of this title. § 678. Person other than grantor treated as substan. tial owner (a) General rule A person other than the grantor shall be treated as the owner of any portion of a trust with respect to which: (1) such person has a power exercisable solely by himself to vest the corpus or the income therefrom in himself, or (2) such person has previously partially re- leased or otherwise modified such a power and after the release or modification retains such control as would, within the principles of sections 671 to 677, inclusive, subject to grantor of a trust to treatment as the owner thereof. (b) Exception where grantor is taxable Subsection (a) shall not apply with respect to a power over income, as originally granted or thereafter modified, if the grantor of the trust or a transferor (to whom section 679 applies) is otherwise treated as the owner under the provi- sions of this subpart other than this section. (c) Obligations of support Subsection (a) shall not apply to a power which enables such person, in the capacity of trustee or cotrustee, merely to apply the income of the trust to the support or mainte- nance of a person whom the holder of the power is obligated to support or maintain except to the extent that such income is so ap- plied. In cases where the amounts so applied or distributed are paid out of corpus or out of other than income of the taxable year, such § 676 Page 476