Subpart F - Miscellaneous

26 USC 681 - Limitation on charitable deduction

(a) Trade or business income
In computing the deduction allowable under section 642 (c) to a trust, no amount otherwise allowable under section 642 (c) as a deduction shall be allowed as a deduction with respect to income of the taxable year which is allocable to its unrelated business income for such year. For purposes of the preceding sentence, the term unrelated business income means an amount equal to the amount which, if such trust were exempt from tax under section 501 (a) by reason of section 501 (c)(3), would be computed as its unrelated business taxable income under section 512 (relating to income derived from certain business activities and from certain property acquired with borrowed funds).

(b) Cross reference
For disallowance of certain charitable, etc., deductions otherwise allowable under section 642 (c), see sections 508 (d) and 4948 (c)(4).

26 USC 682 - Income of an estate or trust in case of divorce, etc.

(a) Inclusion in gross income of wife
There shall be included in the gross income of a wife who is divorced or legally separated under a decree of divorce or of separate maintenance (or who is separated from her husband under a written separation agreement) the amount of the income of any trust which such wife is entitled to receive and which, except for this section, would be includible in the gross income of her husband, and such amount shall not, despite any other provision of this subtitle, be includible in the gross income of such husband. This subsection shall not apply to that part of any such income of the trust which the terms of the decree, written separation agreement, or trust instrument fix, in terms of an amount of money or a portion of such income, as a sum which is payable for the support of minor children of such husband. In case such income is less than the amount specified in the decree, agreement, or instrument, for the purpose of applying the preceding sentence, such income, to the extent of such sum payable for such support, shall be considered a payment for such support.

(b) Wife considered a beneficiary
For purposes of computing the taxable income of the estate or trust and the taxable income of a wife to whom subsection (a) applies, such wife shall be considered as the beneficiary specified in this part.

26 USC 683 - Use of trust as an exchange fund

(a) General rule
Except as provided in subsection (b), if property is transferred to a trust in exchange for an interest in other trust property and if the trust would be an investment company (within the meaning of section 351) if it were a corporation, then gain shall be recognized to the transferor.

(b) Exception for pooled income funds
Subsection (a) shall not apply to any transfer to a pooled income fund (within the meaning of section 642 (c)(5)).

26 USC 684 - Recognition of gain on certain transfers to certain foreign trusts and estates

(a) In general
Except as provided in regulations, in the case of any transfer of property by a United States person to a foreign estate or trust, for purposes of this subtitle, such transfer shall be treated as a sale or exchange for an amount equal to the fair market value of the property transferred, and the transferor shall recognize as gain the excess of

(1) the fair market value of the property so transferred, over

(2) the adjusted basis (for purposes of determining gain) of such property in the hands of the transferor.

(b) Exception
Subsection (a) shall not apply to a transfer to a trust by a United States person to the extent that any person is treated as the owner of such trust under section 671.

(c) Treatment of trusts which become foreign trusts
If a trust which is not a foreign trust becomes a foreign trust, such trust shall be treated for purposes of this section as having transferred, immediately before becoming a foreign trust, all of its assets to a foreign trust.

26 USC 685 - Treatment of funeral trusts

(a) In general
In the case of a qualified funeral trust

(1) subparts B, C, D, and E shall not apply, and

(2) no deduction shall be allowed by section 642 (b).

(b) Qualified funeral trust
For purposes of this subsection, the term qualified funeral trust means any trust (other than a foreign trust) if

(1) the trust arises as a result of a contract with a person engaged in the trade or business of providing funeral or burial services or property necessary to provide such services,

(2) the sole purpose of the trust is to hold, invest, and reinvest funds in the trust and to use such funds solely to make payments for such services or property for the benefit of the beneficiaries of the trust,

(3) the only beneficiaries of such trust are individuals with respect to whom such services or property are to be provided at their death under contracts described in paragraph (1),

(4) the only contributions to the trust are contributions by or for the benefit of such beneficiaries,

(5) the trustee elects the application of this subsection, and

(6) the trust would (but for the election described in paragraph (5)) be treated as owned under subpart E by the purchasers of the contracts described in paragraph (1).

A trust shall not fail to be treated as meeting the requirement of paragraph (6) by reason of the death of an individual but only during the 60-day period beginning on the date of such death.

(1) In general
The term qualified funeral trust shall not include any trust which accepts aggregate contributions by or for the benefit of an individual in excess of $7,000.

(2) Related trusts
For purposes of paragraph (1), all trusts having trustees which are related persons shall be treated as 1 trust. For purposes of the preceding sentence, persons are related if

(A) the relationship between such persons is described in section 267 or 707 (b),

(B) such persons are treated as a single employer under subsection (a) or (b) of section 52, or

(C) the Secretary determines that treating such persons as related is necessary to prevent avoidance of the purposes of this section.

(3) Inflation adjustment
In the case of any contract referred to in subsection (b)(1) which is entered into during any calendar year after 1998, the dollar amount referred to paragraph (1) shall be increased by an amount equal to

(A) such dollar amount, multiplied by

(B) the cost-of-living adjustment determined under section 1 (f)(3) for such calendar year, by substituting calendar year 1997 for calendar year 1992 in subparagraph (B) thereof.

If any dollar amount after being increased under the preceding sentence is not a multiple of $100, such dollar amount shall be rounded to the nearest multiple of $100.

(d) Application of rate schedule
Section 1 (e) shall be applied to each qualified funeral trust by treating each beneficiarys interest in each such trust as a separate trust.

(e) Treatment of amounts refunded to purchaser on cancellation
No gain or loss shall be recognized to a purchaser of a contract described in subsection (b)(1) by reason of any payment from such trust to such purchaser by reason of cancellation of such contract. If any payment referred to in the preceding sentence consists of property other than money, the basis of such property in the hands of such purchaser shall be the same as the trusts basis in such property immediately before the payment.

(f) Simplified reporting
The Secretary may prescribe rules for simplified reporting of all trusts having a single trustee and of trusts terminated during the year.