US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 665

Definitions applicable to subpart D

(a)

Undistributed net income

For purposes of this subpart, the term “undistributed net income” for any taxable year means the amount by which distributable net income of the trust for such taxable year exceeds the sum of—
(1)
the amounts for such taxable year specified 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, except as provided in subsection (c), the term “accumulation 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 subsection (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 beneficiary 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)

Exception for accumulation distributions from certain domestic trusts

For purposes of this subpart—
(1)

In general

In the case of a qualified trust, any distribution in any taxable year beginning after the date of the enactment of this subsection shall be computed without regard to any undistributed net income.

(2)

Qualified trust

For purposes of this subsection, the term “qualified trust” means any trust other than—
(A)
a foreign trust (or, except as provided in regulations, a domestic trust which at any time was a foreign trust), or
(B)
a trust created before , unless it is established that the trust would not be aggregated with other trusts under section 643(f) if such section applied to such trust.
(d)

Taxes imposed on the trust

For purposes of this subpart—
(1)

In general

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 or part IV of subchapter A) and which, under regulations prescribed by the Secretary, are properly allocable to the undistributed portions of distributable 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) to any beneficiary.

(2)

Foreign trusts

In the case of any foreign trust, the term “taxes imposed on the trust” includes the amount, reduced as provided in the last sentence of paragraph (1), of any income, war profits, and excess profits taxes imposed by any foreign country or possession of the United States on such foreign trust which, as determined under paragraph (1), are so properly allocable. Under rules or regulations prescribed by the Secretary, in the case of any foreign trust of which the settlor or another person would be treated as owner of any portion of the trust under subpart E but for section 672(f), the term “taxes imposed on the trust” includes the allocable amount of any income, war profits, and excess profits taxes imposed by any foreign country or possession of the United States on the settlor or such other person in respect of trust income.

(e)

Preceding taxable year

For purposes of this subpart—
(1)
In the case of a foreign trust created by a United States person, the term “preceding taxable year” does not include any taxable year of the trust to which this part does not apply.
(2)
In the case of a preceding taxable year with respect to which a trust qualified, without regard to this subpart, under the provisions of subpart B, for purposes of the application of this subpart to such trust for such taxable year, such trust shall, in accordance with regulations prescribed by the Secretary, be treated as a trust to which subpart C applies.

Aug. 16, 1954, ch. 73668A Stat. 223Pub. L. 87–834, § 7(b)76 Stat. 985Pub. L. 91–172, title III, § 331(a)83 Stat. 592Pub. L. 92–178, title III, § 306(a)85 Stat. 524Pub. L. 94–455, title VII90 Stat. 1577Pub. L. 95–600, title VII, § 701(q)(1)(A)92 Stat. 2909Pub. L. 99–514, title XVIII, § 1847(b)(16)100 Stat. 2857Pub. L. 101–508, title XI, § 11802(f)(2)104 Stat. 1388–530Pub. L. 104–188, title I, § 1904(b)(1)110 Stat. 1912Pub. L. 105–34, title V, § 507(a)111 Stat. 856(, ; , , ; , , ; , , ; , §§ 701(b), (c), (d)(2), (3), title XIX, § 1906(b)(13)(A), , , 1578, 1834; , , ; , , ; , , ; , (c)(2), , ; , title XVI, § 1604(g)(2), , , 1099.)

Editorial Notes

References in Text

Pub. L. 105–34The date of the enactment of this subsection, referred to in subsec. (c)(1), is the date of enactment of , which was approved .

Amendments

Pub. L. 105–34, § 507(a)(2)1997—Subsec. (b). , inserted “except as provided in subsection (c),” after “subpart,” in introductory provisions.

Pub. L. 105–34, § 507(a)(1)Subsec. (c). , added subsec. (c).

Pub. L. 105–34, § 1604(g)(2)Subsec. (d)(1). , struck out “or 669(d) and (e)” after “666(b) and (c)”.

Pub. L. 104–188, § 1904(c)(2)Special Rule Applicable to Distributions by Certain Foreign Trusts1996—Subsec. (c). , struck out subsec. (c) which read as follows: “.—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.”

Pub. L. 104–188, § 1904(b)(1)Subsec. (d)(2). , inserted at end “Under rules or regulations prescribed by the Secretary, in the case of any foreign trust of which the settlor or another person would be treated as owner of any portion of the trust under subpart E but for section 672(f), the term ‘taxes imposed on the trust’ includes the allocable amount of any income, war profits, and excess profits taxes imposed by any foreign country or possession of the United States on the settlor or such other person in respect of trust income.”

Pub. L. 101–5081990—Subsec. (e). amended subsec. (e) generally. Prior to amendment, subsec. (e) read as follows: “For purposes of this subpart—

“(1) in the case of a trust (other than a foreign 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 accumulation distribution is made, if it is made in a taxable year beginning before , or

“(B) which begins before , in the case of an accumulation distribution made during a taxable year beginning after , and

“(2) in the case of a foreign trust created by a United States person, such term does not include any taxable year of the trust to which this part does not apply.

In the case of a preceding taxable year with respect to which a trust qualifies (without regard to this subpart) under the provisions of subpart B, for purposes of the application of this subpart to such trust for such taxable year, such trust shall, in accordance with regulations prescribed by the Secretary, be treated as a trust to which subpart C applies.”

Pub. L. 99–5141986—Subsec. (d)(1). substituted “part IV” for “subpart A of part IV”.

Pub. L. 95–6001978—Subsec. (d). designated existing provisions as par. (1), defined “taxes imposed on the trust” to mean imposition of taxes without regard to subpart A of part IV of subchapter (A), and added par. (2).

Pub. L. 94–455, § 701(b)1976—Subsec. (b). , (c), inserted provisions that for purposes of sec. 667 the amounts specified in par. (2) of sec. 661(a) not include amounts paid, credited, or required to be distributed to a beneficiary from a trust as income accumulated before the birth of such beneficiary or before such beneficiary reaches 21, and that if the amounts 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 be no accumulation distribution for such year.

Pub. L. 94–455, § 1906(b)(13)(A)Subsecs. (d), (e). , struck out “or his delegate” after “Secretary”.

Pub. L. 94–455, § 701(d)(2)Subsec. (e)(1). , struck out provision that preceding taxable year does not include any taxable year of the trust which begins before , in the case of a capital gain distribution made during a taxable year beginning after .

Pub. L. 94–455, § 701(d)(3)Subsecs. (f), (g). , struck out subsec. (f) which related to undistributed capital gains, and subsec. (g) which related to capital gain distribution.

Pub. L. 92–1781971—Subsec. (g). struck out “for such taxable year” after “undistributed capital gain” in introductory text.

Pub. L. 91–1721969—Subsec. (a)(2). inserted “attributable to such distributable net income” after “on the trust”.

Pub. L. 91–172Subsec. (b). substituted “Accumulation distribution” for “Accumulation distributions of trusts other than certain foreign trusts” in heading, combined existing provisions of subsecs. (b) and (c) defining “accumulation distribution” in the case of a trust (other than a foreign trust created by a United States person) and of a foreign trust created by a United States person, respectively, in provisions now designated as pars. (1) and (2), deleting “the amount (if in excess of $2,000)” before “by which” in introductory text and inserting “(but not below zero)” in par. (2), and deleted second sentence providing that for purposes of this subsection, the amount specified in par. (2) of section 661(a) shall be determined without regard to section 666 and excepting from “accumulation distributions”: accumulations before birth or attainment of age 21; distributions for emergency needs; distributions, where beneficiary attained specified age or ages and there were not more than 4 distributions, at intervals of 4 or more years; and final distribution of trust was made more than 9 years after date of last transfer to the trust.

Pub. L. 91–172Subsec. (c). substituted “Special rule applicable to distributions by certain foreign trusts” for “Accumulation distribution of certain foreign trusts” in heading, inserted introductory phrase “For purposes of this subpart”, reenacted provisions of former third sentence as the subsection, struck out first sentence which defined in the case of a foreign trust created by a United States person the term “accumulation distribution”, (see subsec. (b) of this section), and deleted second sentence which stated that “For purposes of this subsection, the amount specified in paragraph (2) of section 661(a) shall be determined without regard to section 666.”

Pub. L. 91–172Subsec. (d). substituted “taxable year of the trust” for “taxable year on the trust”, “allocable to the undistributed portions of distributable net income and gains to excess of losses from sales or exchanges of capital assets” for “allocable to the undistributed portion of the distributable net income”, and “reduced by any amount of such taxes deemed distributed under section 666(b) and (c) or 669(d) and (e) to any beneficiary” for “reduced by any amount of such taxes allowed, under sections 667 and 668, as a credit to any beneficiary on account of any accumulation distribution determined for any taxable year”.

Pub. L. 91–172Subsec. (e). substituted provisions of first sentence contained in pars. 1(A) to (C) and (2) for prior first sentence which read “For purposes of this subpart, the term ‘preceding taxable year’ does not include any taxable year of the trust to which this part does not apply” and reenacted provisions of second sentence.

Pub. L. 91–172Subsecs. (f), (g). added subsecs. (f) and (g).

Pub. L. 87–834, § 7(b)(1)1962—Subsec. (b). , substituted “Accumulation distributions of trusts other than certain foreign trusts” for “Accumulation distribution” in heading, and inserted “in the case of a trust (other than a foreign trust created by a United States person),” after “purposes of this subpart,”.

Pub. L. 87–834, § 7(b)(2)Subsecs. (c) to (e). , added subsec. (c) and redesignated former subsecs. (c) and (d) as (d) and (e), respectively.

Statutory Notes and Related Subsidiaries

Effective Date of 1997 Amendment

Pub. L. 105–34, title V, § 507(c)(1)111 Stat. 857

“The amendments made by subsection (a) [amending this section] shall apply to distributions in taxable years beginning after the date of the enactment of this Act [].”
, , , provided that:

Effective Date of 1996 Amendment

Pub. L. 104–188section 1904(d) of Pub. L. 104–188section 643 of this titleAmendment by effective , with exception for certain trusts, see , set out as a note under .

Effective Date of 1986 Amendment

Pub. L. 99–514Pub. L. 98–369, div. Asection 1881 of Pub. L. 99–514section 48 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, , to which such amendment relates, see , set out as a note under .

Effective Date of 1978 Amendment

Pub. L. 95–600, title VII, § 701(q)(3)(A)92 Stat. 2910

section 667 of this title“The amendments made by paragraph (1) [amending this section and ] shall apply to distributions made in taxable years beginning after .”
, , , provided that:

Effective Date of 1976 Amendment

Pub. L. 94–455section 667 of this titleAmendment by section 701(b), (c), (d)(2), (3) of applicable to distributions made in taxable years beginning after , see section 701(h), set out as a note under .

Effective Date of 1971 Amendment

Pub. L. 92–178, title III, § 306(a)85 Stat. 524, , , provided that the amendment made by that section is effective with respect to taxable years beginning after .

Effective Date of 1969 Amendment

Pub. L. 91–172, title III, § 331(d)83 Stat. 598Pub. L. 92–178, title III, § 306(b)85 Stat. 524Pub. L. 99–514, § 2100 Stat. 2095

“(1)

General rule.—

Except as otherwise provided in this subsection, the amendments made by this section [amending this section and sections 663, 666 to 669, and 6401 of this title] shall apply to taxable years beginning after .
“(2)

Exceptions.—

“(A)
Amounts paid, credited, or required to be distributed by a trust (other than a foreign trust created by a United States person) on or before the last day of a taxable year of the trust beginning before , shall not be deemed to be accumulation distributions to the extent that such amounts were accumulated by a trust in taxable years of such trust beginning before , and would have been excepted from the definition of an accumulation distribution by reason of paragraph (1), (2), (3), or (4) of section 665(b) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], as in effect on , if they had been distributed on the last day of the last taxable year of the trust beginning before .
“(B)
For taxable years of a trust beginning before , the first sentence of section 666(a) of the Internal Revenue Code of 1986 (as amended by this section) shall not apply, and the amount of the accumulation distribution of the trust for such taxable years shall be deemed to be an amount within the meaning of paragraph (2) of section 661(a) distributed on the last day of each of the preceding taxable years to the extent that such amount exceeds the total of any undistributed net income for any taxable years intervening between the taxable year with respect of which the accumulation distribution is determined and such preceding taxable year.
“(C)
In the case of a trust which was in existence on , section 669 of the Internal Revenue Code of 1986, as amended by this section, shall not apply to capital gain distributions made to a beneficiary before . If the beneficiary receives capital gain distributions from more than one such trust before , the preceding sentence shall apply to capital gain distributions from only one such trust, such one to be designated by the taxpayer in accordance with regulations prescribed by the Secretary or his delegate. For purposes of the preceding sentence, capital gain distributions received from a trust qualifying under section 2056(b)(5) of the Internal Revenue Code of 1986 by a surviving spouse (who is the beneficiary of only one such trust) shall be disregarded.”
, , , as amended by , , ; , , , provided that:

Effective Date of 1962 Amendment

Pub. L. 87–834section 7(j) of Pub. L. 87–834section 643 of this titleAmendment of section by applicable with respect to distributions made after , see , set out as a note under .

Savings Provision

Pub. L. 101–508section 11821(b) of Pub. L. 101–508section 45K of this titleFor provisions that nothing in amendment by be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to , for purposes of determining liability for tax for periods ending after , see , set out as a note under .

Plan Amendments Not Required Until January 1, 1989

Pub. L. 99–514section 1140 of Pub. L. 99–514section 401 of this titleFor provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after , see , as amended, set out as a note under .