§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 6, 2026|Official source

Summary

If you are the beneficiary of an estate or trust that can accumulate income or pay out principal, you report two kinds of amounts as income. First, any income the estate or trust is required to distribute to you for the year, whether or not you actually received it. Second, all other amounts actually paid or credited to you. If the total payouts to all beneficiaries exceed the estate or trust's distributable net income, each beneficiary reports only a proportionate share of that income, so you are never taxed on more than the entity's income allows. What you report keeps the same character it had inside the estate or trust: each payout is treated as a proportionate mix of the entity's classes of income, such as interest or dividends, unless the governing document specifically assigns different income to different beneficiaries. If your tax year differs from the estate or trust's, you report amounts based on its tax year that ends within or with yours.

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