26 USC 668 - Interest charge on accumulation distributions from foreign trusts

U.S Code last checked for updates: May 15, 2024

§ 668.

Interest charge on accumulation distributions from foreign trusts

(a)

General rule

For purposes of the tax determined under section 667(a)—

(1)

Interest determined using underpayment rates

(2)

Period

(3)

Applicable number of years

For purposes of paragraph (2)—

(A)

In general

The applicable number of years with respect to a distribution is the number determined by dividing—

(i)

the sum of the products described in subparagraph (B) with respect to each undistributed income year, by

(ii)

the aggregate undistributed net income.

The quotient determined under the preceding sentence shall be rounded under procedures prescribed by the Secretary.

(B)

Product described

For purposes of subparagraph (A), the product described in this subparagraph with respect to any undistributed income year is the product of—

(i)

the undistributed net income for such year, and

(ii)

the sum of the number of taxable years between such year and the taxable year of the distribution (counting in each case the undistributed income year but not counting the taxable year of the distribution).

(4)

Undistributed income year

(5)

Determination of undistributed net income

(6)

Periods before 1996

Interest for the portion of the period described in paragraph (2) which occurs before January 1, 1996, shall be determined—

(A)

by using an interest rate of 6 percent, and

(B)

without compounding until January 1, 1996.

(b)

Limitation

(c)

Interest charge not deductible

(Added Pub. L. 94–455, title X, § 1014(b), Oct. 4, 1976, 90 Stat. 1617; amended Pub. L. 101–508, title XI, § 11802(f)(3), Nov. 5, 1990, 104 Stat. 1388–530; Pub. L. 104–188, title I, § 1906(a), Aug. 20, 1996, 110 Stat. 1914.)

cite as: 26 USC 668