# 26 U.S.C. § 662: Inclusion of amounts in gross income of beneficiaries of estates and trusts accumulating income or distributing corpus Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 662(a)(1). ## § 662(a) Inclusion 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: **§ 662(a)(1) Amounts required to be distributed currently.** 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. **§ 662(a)(2) Other amounts distributed.** All other amounts properly paid, credited, or required to be distributed to such beneficiary for the taxable year. If the sum of— **§ 662(a)(2)(A)** the amount of income for the taxable year required to be distributed currently to all beneficiaries, and **§ 662(a)(2)(B)** all other amounts properly paid, credited, or required to be distributed to all beneficiaries exceeds the distributable net income 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 (reduced by the amounts specified in (A)) as the other amounts properly paid, credited or required to be distributed to the beneficiary bear to the other amounts properly paid, credited, or required to be distributed to all beneficiaries. ## § 662(b) Character of amounts 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. ## § 662(c) Different taxable years 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. ## Regulations - [Treas. Reg. § 1.662(a)-1](/26/reg/1.662(a)-1.md): Inclusion of amounts in gross income of beneficiaries of estates and complex trusts; general. (interprets § 662(a)) - [Treas. Reg. § 1.662(a)-2](/26/reg/1.662(a)-2.md): Currently distributable income. (interprets § 662(a)) - [Treas. Reg. § 1.662(a)-3](/26/reg/1.662(a)-3.md): Other amounts distributed. (interprets § 662(a)) - [Treas. Reg. § 1.662(a)-4](/26/reg/1.662(a)-4.md): Amounts used in discharge of a legal obligation. (interprets § 662(a)) - [Treas. Reg. § 1.662(b)-1](/26/reg/1.662(b)-1.md): Character of amounts; when no charitable contributions are made. (interprets § 662(b)) - [Treas. Reg. § 1.662(b)-2](/26/reg/1.662(b)-2.md): Character of amounts; when charitable contributions are made. (interprets § 662(b)) - [Treas. Reg. § 1.662(c)-1](/26/reg/1.662(c)-1.md): Different taxable years. (interprets § 662(c)) - [Treas. Reg. § 1.662(c)-2](/26/reg/1.662(c)-2.md): Death of individual beneficiary. (interprets § 662(c)) - [Treas. Reg. § 1.662(c)-3](/26/reg/1.662(c)-3.md): Termination of existence of other beneficiaries. (interprets § 662(c)) - [Treas. Reg. § 1.662(c)-4](/26/reg/1.662(c)-4.md): Illustration of the provisions of sections 661 and 662. (interprets § 662(c)) ## Leading cases - [United California Bank v. United States, 439 U.S. 180 (1978)](https://www.courtlistener.com/opinion/109955/united-california-bank-v-united-states/) - [Estate of O'Connor v. Commissioner, 69 T.C. 165 (1977)](https://www.courtlistener.com/opinion/4704499/estate-of-oconnor-v-commissioner/) - [Furstenberg v. Commissioner, 83 T.C. 755 (1984)](https://www.courtlistener.com/opinion/4706056/furstenberg-v-commissioner/) ## Connections Cites: § 642 Special rules for credits and deductions; § 661 Deduction for estates and trusts accumulating income or distributing corpus Cited by: § 667 Treatment of amounts deemed distributed by trust in preceding years; § 677 Income for benefit of grantor; § 678 Person other than grantor treated as substantial owner Derived from: 1939 § 162(b); 1939 § 164 ## Amendments - 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 220 - 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1834