§662 — Title 26 Internal Revenue Code | U.S. Code

§662 Inclusion of Amounts in Gross Income of Beneficiaries of Estates and Trusts Accumulating Income or Distributing Corpus

Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter J— Estates, Trusts, Beneficiaries, and Decedents › Part I— ESTATES, TRUSTS, AND BENEFICIARIES › Subpart C— Estates and Trusts Which May Accumulate Income or Which Distribute Corpus › § 662

Last updated Apr 5, 2026|Official source

Summary

Require beneficiaries to count certain payments from an estate or trust as part of their taxable income. That includes the income the trust must pay out for the year (even if it wasn’t actually handed over) and any other amounts the trust pays, credits, or must distribute to the beneficiary during the year. If the total required payments to all beneficiaries is more than the estate’s distributable net income (DNI — the amount of the trust’s income available to distribute), each beneficiary’s share is reduced so the total equals the DNI. Amounts that must be paid from corpus count only to the extent they are actually paid from income. The tax type of the money (for example, interest, dividends, or capital gains) stays the same for the beneficiary as it was for the estate or trust, unless the trust instrument says otherwise. If the beneficiary has a different tax year, the amounts are based on the estate’s DNI and distributions that fall within the estate years ending in the beneficiary’s year.

Title 26, §662

Internal Revenue Code — Source: USLM XML via OLRC

(a)Subject to subsection (b), there shall be included in the gross income of a beneficiary to whom an amount specified in section 661(a) is paid, credited, or required to be distributed (by an estate or trust described in section 661), the sum of the following amounts:

(1)The amount of income for the taxable year required to be distributed currently to such beneficiary, whether distributed or not. If the amount of income required to be distributed currently to all beneficiaries exceeds the distributable net income (computed without the deduction allowed by section 642(c), relating to deduction for charitable, etc., purposes) of the estate or trust, then, in lieu of the amount provided in the preceding sentence, there shall be included in the gross income of the beneficiary an amount which bears the same ratio to distributable net income (as so computed) as the amount of income required to be distributed currently to such beneficiary bears to the amount required to be distributed currently to all beneficiaries. For purposes of this section, the phrase “the amount of income for the taxable year required to be distributed currently” includes any amount required to be paid out of income or corpus to the extent such amount is paid out of income for such taxable year.

(2)All other amounts properly paid, credited, or required to be distributed to such beneficiary for the taxable year. If the sum of—

(A)the amount of income for the taxable year required to be distributed currently to all beneficiaries, and

(B)all other amounts properly paid, credited, or required to be distributed to all beneficiaries

(b)The amounts determined under subsection (a) shall have the same character in the hands of the beneficiary as in the hands of the estate or trust. For this purpose, the amounts shall be treated as consisting of the same proportion of each class of items entering into the computation of distributable net income as the total of each class bears to the total distributable net income of the estate or trust unless the terms of the governing instrument specifically allocate different classes of income to different beneficiaries. In the application of the preceding sentence, the items of deduction entering into the computation of distributable net income (including the deduction allowed under section 642(c)) shall be allocated among the items of distributable net income in accordance with regulations prescribed by the Secretary. In the application of this subsection to the amount determined under paragraph (1) of subsection (a), distributable net income shall be computed without regard to any portion of the deduction under section 642(c) which is not attributable to income of the taxable year.

(c)If the taxable year of a beneficiary is different from that of the estate or trust, the amount to be included in the gross income of the beneficiary shall be based on the distributable net income of the estate or trust and the amounts properly paid, credited, or required to be distributed to the beneficiary during any taxable year or years of the estate or trust ending within or with his taxable year.

Editorial Notes

Amendments

1976—Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.

§662 Inclusion of Amounts in Gross Income of Beneficiaries of Estates and Trusts Accumulating Income or Distributing Corpus

Summary

Title 26, §662

Notes & Related Subsidiaries

Editorial Notes

Amendments

Citations & Metadata