Internal Revenue Code · 26 U.S.C.

§ 685. Treatment of funeral trusts

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

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. § 685

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status: In force
Added: August 5, 1997 by Pub. L. 105–34
Last amended: August 29, 2008 by Pub. L. 110–317
Amendments: 2 dated changes in the source credit
Length: 5 subsections · 424 words · about 2 min to read
Defines: 1 term
Cross-references: cites 2; cited by 0 Code sections and 1 other regulation

¶(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.

¶(c) Application of rate schedule

Section 1(e) shall be applied to each qualified funeral trust by treating each beneficiary’s interest in each such trust as a separate trust.

¶(d) 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 trust’s basis in such property immediately before the payment.

¶(e) Simplified reporting

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

(Added Pub. L. 105–34, title XIII, § 1309(a), Aug. 5, 1997, 111 Stat. 1042; amended Pub. L. 105–206, title VI, § 6013(b), July 22, 1998, 112 Stat. 820; Pub. L. 110–317, § 9(a), (b), Aug. 29, 2008, 122 Stat. 3530.)

Terms defined here

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qualified funeral trust § 685(b)

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 2 other sections

Cited in 1 regulation not issued under it

§ 1.1411-3 Application to estates and trusts.

Amendment history

From the source credit and the official notes, newest first.

August 29, 2008Amended by Pub. L. 110–317Parts changed in 2008: (c)
July 22, 1998Amended by Pub. L. 105–206Parts changed in 1998: (b) (f)
August 5, 1997Added by Pub. L. 105–34

Where it sits in the Code

Nearby sections

§ 681 Limitation on charitable deduction
§ 682 Repealed
§ 683 Use of trust as an exchange fund
§ 684 Recognition of gain on certain transfers to certain foreign trusts and estates
§ 685 Treatment of funeral trusts

Official notes

Show the Law Revision Counsel's notes (amendments, effective dates)

Inflation Adjusted Items for Certain Years

For inflation adjustment of certain items in this section, see Revenue Procedures listed in a table under section 1 of this title.

Editorial Notes

Amendments

2008—Subsecs. (c) to (f). Pub. L. 110–317 redesignated subsecs. (d) to (f) as (c) to (e), respectively, and struck out former subsec. (c), which related to dollar limitation on contributions to qualified funeral trusts.

1998—Subsec. (b). Pub. L. 105–206, § 6013(b)(1), inserted concluding provisions.

Subsec. (f). Pub. L. 105–206, § 6013(b)(2), inserted “and of trusts terminated during the year” before period at end.

Effective Date of 2008 Amendment

Pub. L. 110–317, § 9(c), Aug. 29, 2008, 122 Stat. 3530, 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. 29, 2008].”

Effective Date of 1998 Amendment

Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

Effective Date

Pub. L. 105–34, title XIII, § 1309(c), Aug. 5, 1997, 111 Stat. 1043, provided that: “The amendments made by this section [enacting this section] shall apply to taxable years ending after the date of the enactment of this Act [Aug. 5, 1997].”