Internal Revenue Code · 26 U.S.C.
§ 663. Special rules applicable to sections 661 and 662
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 663
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- December 30, 1969 by Pub. L. 91–172
- Last amended
- August 5, 1997 by Pub. L. 105–34
- Amendments
- 2 dated changes in the source credit
- Length
- 3 subsections · 477 words · about 2 min to read
- Cross-references
- cites 7; cited by 2 Code sections and 21 other regulations
- Regulations
- 11 issued under this section
Any amount which, under the terms of the governing instrument, is properly paid or credited as a gift or bequest of a specific sum of money or of specific property and which is paid or credited all at once or in not more than 3 installments. For this purpose an amount which can be paid or credited only from the income of the estate or trust shall not be considered as a gift or bequest of a specific sum of money.
Any amount paid or permanently set aside or otherwise qualifying for the deduction provided in section 642(c) (computed without regard to sections 508(d), 681, and 4948(c)(4)).
Any amount paid, credited, or distributed in the taxable year, if section 651 or section 661 applied to such amount for a preceding taxable year of an estate or trust because credited or required to be distributed in such preceding taxable year.
If within the first 65 days of any taxable year of an estate or a trust, an amount is properly paid or credited, such amount shall be considered paid or credited on the last day of the preceding taxable year.
Paragraph (1) shall apply with respect to any taxable year of an estate or a trust only if the executor of such estate or the fiduciary of such trust (as the case may be) elects, in such manner and at such time as the Secretary prescribes by regulations, to have paragraph (1) apply for such taxable year.
For the sole purpose of determining the amount of distributable net income in the application of sections 661 and 662, in the case of a single trust having more than one beneficiary, substantially separate and independent shares of different beneficiaries in the trust shall be treated as separate trusts. Rules similar to the rules of the preceding provisions of this subsection shall apply to treat substantially separate and independent shares of different beneficiaries in an estate having more than 1 beneficiary as separate estates. The existence of such substantially separate and independent shares and the manner of treatment as separate trusts or estates, including the application of subpart D, shall be determined in accordance with regulations prescribed by the Secretary.
(Aug. 16, 1954, ch. 736, 68A Stat. 222; Pub. L. 91–172, title I, § 101(j)(17), title III, § 331(b), Dec. 30, 1969, 83 Stat. 528, 598; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 105–34, title XIII, §§ 1306(a), (b), 1307(a), (b), Aug. 5, 1997, 111 Stat. 1041.)
Regulations under this section
Treasury regulations (26 CFR) issued under § 663
- § 1.663(a)-1 Special rules applicable to sections 661 and 662; exclusions; gifts, bequests, etc.
- § 1.663(a)-2 Charitable, etc., distributions.
- § 1.663(a)-3 Denial of double deduction.
- § 1.663(b)-1 Distributions in first 65 days of taxable year; scope.
- § 1.663(b)-2 Election.
- § 1.663(c)-1 Separate shares treated as separate trusts or as separate estates; in general.
- § 1.663(c)-2 Rules of administration.
- § 1.663(c)-3 Applicability of separate share rule to certain trusts.
- § 1.663(c)-4 Applicability of separate share rule to estates and qualified revocable trusts.
- § 1.663(c)-5 Examples.
- § 1.663(c)-6 Effective dates.
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 7 other sections
- § 661(a) Deduction for estates and trusts accumulating income or distributing corpus
- § 642(c) Special rules for credits and deductions
- § 508(d) Special rules with respect to section 501(c)(3) organizations
- § 681 Limitation on charitable deduction
- § 4948(c)(4) Application of taxes and denial of exemption with respect to certain foreign organizations
- § 651 Deduction for trusts distributing current income only
- § 662 Inclusion of amounts in gross income of beneficiaries of estates and trusts accumulating income or distributing corpus
Cited by 2 Code sections
Cited in 21 regulations not issued under it
- § 1.102-1 Gifts and inheritances.
- § 1.199A-6 Relevant passthrough entities (RPEs), publicly traded partnerships (PTPs), trusts, and estates.
- § 1.404(a)-12 Contributions of an employer under a plan that does not meet the requirements of section 401(a); application of section 404(a)(5).
- § 1.641(c)-1 Electing small business trust.
- § 1.643(a)-3 Capital gains and losses.
- § 1.645-1 Election by certain revocable trusts to be treated as part of estate.
- § 1.661(a)-1 Estates and trusts accumulating income or distributing corpus; general.
- § 1.661(a)-2 Deduction for distributions to beneficiaries.
- § 1.662(a)-1 Inclusion of amounts in gross income of beneficiaries of estates and complex trusts; general.
- § 1.662(a)-3 Other amounts distributed.
- § 1.665(a)-1 Undistributed net income.
- § 1.665(b)-2 Exclusions from accumulation distributions in the case of trusts (other than a foreign trust created by a U.S. person).
- § 1.665(b)-3 Exclusions under section 663(a)(1).
- § 1.665(e)-2 Application of separate share rule.
- § 1.665(a)-1A Undistributed net income.
- § 1.665(b)-1A Accumulation distributions.
- § 1.665(g)-2A Application of separate share rule.
- § 1.883-4 Qualified shareholder stock ownership test.
- § 1.884-5 Qualified resident.
- § 1.1361-1 S corporation defined.
- § 1.1411-3 Application to estates and trusts.
Amendment history
From the source credit and the official notes, newest first.
Where it sits in the Code
- 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
Nearby sections
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
1997—Subsec. (b). Pub. L. 105–34, § 1306(a), inserted “an estate or” before “a trust” in pars. (1) and (2).
Subsec. (b)(2). Pub. L. 105–34, § 1306(b), substituted “the executor of such estate or the fiduciary of such trust (as the case may be)” for “the fiduciary of such trust”.
Subsec. (c). Pub. L. 105–34, § 1307(a), (b), inserted “estates or” before “trusts” in heading, “Rules similar to the rules of the preceding provisions of this subsection shall apply to treat substantially separate and independent shares of different beneficiaries in an estate having more than 1 beneficiary as separate estates.” before last sentence, and “or estates” after “trusts” in last sentence.
1976—Subsecs. (b)(2), (c). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.
1969—Subsec. (a)(2). Pub. L. 91–172, § 101(j)(17), substituted “sections 508(d), 681, and 4948(c)(4)” for “section 681”.
Subsec. (b)(2). Pub. L. 91–172, § 331(b), incorporated existing provisions of subpar. (C) of former first sentence making subsec. (b) applicable only to a trust where the fiduciary elected to have the subsec. apply and part of former second sentence making the election applicable in accordance with prescribed regulations; substituted provisions for regulations to spell out manner and time of election for part of former second sentence requiring the election to be made not later than the time prescribed by law for filing the return for the year, including any extension; and omitted: subpars. (A) and (B) of former first sentence which had provided for application of subsec. (b) only to a trust “(A) which was in existence prior to January 1, 1954” and “(B) which, under the terms of its governing instrument, may not distribute in any taxable year amounts in excess of the income of the preceding taxable year”; part of former second sentence which required the election to be made for first taxable year to which this part is applicable; and third sentence that “If such election is made with respect to a taxable year, this subsection shall apply to all amounts properly paid or credited within the first 65 days of all subsequent taxable years of such trust.”
Statutory Notes and Related Subsidiaries
Effective Date of 1997 Amendment
Pub. L. 105–34, title XIII, § 1306(c), Aug. 5, 1997, 111 Stat. 1041, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after the date of the enactment of this Act [Aug. 5, 1997].”
Pub. L. 105–34, title XIII, § 1307(c), Aug. 5, 1997, 111 Stat. 1041, provided that: “The amendments made by this section [amending this section] shall apply to estates of decedents dying after the date of the enactment of this Act [Aug. 5, 1997].”
Effective Date of 1969 Amendment
Amendment by section 101(j)(17) of Pub. L. 91–172 effective Jan. 1, 1970, see section 101(k)(1) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title.
Amendment by section 331(b) of Pub. L. 91–172 applicable to taxable years beginning before Jan. 1, 1970, see section 331(d) of Pub. L. 91–172, set out as a note under section 665 of this title.