§651 — Deduction for trusts distributing current income only
24 cases·2 followed·2 distinguished·1 questioned·19 cited—8% support
Statute Text — 26 U.S.C. §651
In the case of any trust the terms of which—
provide that all of its income is required to be distributed currently, and
do not provide that any amounts are to be paid, permanently set aside, or used for the purposes specified in section 642(c) (relating to deduction for charitable, etc., purposes),
there shall be allowed as a deduction in computing the taxable income of the trust the amount of the income for the taxable year which is required to be distributed currently. This section shall not apply in any taxable year in which the trust distributes amounts other than amounts of income described in paragraph (1).
If the amount of income required to be distributed currently exceeds the distributable net income of the trust for the taxable year, the deduction shall be limited to the amount of the distributable net income. For this purpose, the computation of distributable net income shall not include items of income which are not included in the gross income of the trust and the deductions allocable thereto.
24 Citing Cases
.2008-261 ("We need not decide whether the evidence is admissible,, because we find that it is insufficient to establish that petitioner was financiall y disabled within the meaning of section 6511(h), .") .-.,', order the " refund.
_ 18 .- Pursuant to section 651 2(b)(1), this Court's, overpayment jurisdiction is limited to the same taxable year or years for which the Commissioner has issued a-notice of deficiency and with regard to which the taxpayer has timely filed a.
8 On brief respondent raises three alternative arguments as to why the income from the trusts is attributable to petitioners: (1) the trusts’ income is taxable under the grantor trust provisions of sections 671 through 677; (2) the assignment of individual income to the trusts is not recognized for federal income tax purposes; or (3) pe
651-124 (LexisNexis 2012). The magistratejudge disagreed with petitioner and held that the gains and interest were not exempt because the pension benefits "lost their character as 'retirement plan assets'" when they were transferred into the IRA. Subsequently, in 2009 the District Court filed an order adopting the magistrate judge's findihgs a
ommissioner, 90 T.C. 1248 (1988); Castro v. Commissioner, T.C. Memo. 2001-115. - 24 - C. Income Distribution Respondent determined that $8,789 deducted by Floors Trust as an income distribution was disallowed for failure to meet the requirements of section 651 or 661. Because we have held that Floors Trust is disregarded for Federal income tax purposes, no deductions for distributions of income are allowed. We accordingly sustain respondent’s determination increasing trust income (reportable by
tion was not a prohibited transaction resulting in personal benefit or inurement. Respondent disallowed petitioner’s claimed exemption deduction in the amount of $100 because of petitioner’s failure to show entitlement to such deduction under either section 651 or 652. Nis Venture Trust Respondent disallowed petitioner’s cost of goods sold in the amount of $404,420 and a deduction for Schedule C, Profit or Loss From Business, expenses in the amount of $9,737 because of petitioner’s failure to su
tion was not a prohibited transaction resulting in personal benefit or inurement. Respondent disallowed petitioner’s claimed exemption deduction in the amount of $100 because of petitioner’s failure to show entitlement to such deduction under either section 651 or 652. Nis Venture Trust Respondent disallowed petitioner’s cost of goods sold in the amount of $404,420 and a deduction for Schedule C, Profit or Loss From Business, expenses in the amount of $9,737 because of petitioner’s failure to su
tion was not a prohibited transaction resulting in personal benefit or inurement. Respondent disallowed petitioner’s claimed exemption deduction in the amount of $100 because of petitioner’s failure to show entitlement to such deduction under either section 651 or 652. Nis Venture Trust Respondent disallowed petitioner’s cost of goods sold in the amount of $404,420 and a deduction for Schedule C, Profit or Loss From Business, expenses in the amount of $9,737 because of petitioner’s failure to su