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INTERNAL REVENUE CODE OF 1954
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. SEC. 663. SPECIAL RULES APPLICABLE TO SECTIONS 661 AND 662. (a) EXCLUSIONS.—There shall not be included as amounts falling within section 661(a) or 662 (a)— (1) G I F T S, BEQUESTS, ETC.—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 monej^ or of specific property and which is paid or credited all a t 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. (2) CHARITABLE, ETC., DISTRIBUTIONS.—Any amount paid or permanently set aside or otherwise qualifying for the deduction provided in section 642(c) (computed without regard to section 681). (3) D E N I A L OF DOUBLE DEDUCTION.—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. (b) DISTRIBUTIONS IN F I R S T SIXTY-FIVE D A Y S YEAR.—• (1) GENERAL RULE.—If within the first 65 days
OF
TAXABLE
of any taxable year of 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. (2) LIMITATION.—This subsection shall apply only to a trust—• (A) which was in existence prior to January 1, 1954, (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, and (C) on behalf of which the fiduciary elects to have this subsection apply. The election authorized by subparagraph (C) shall be made for the first taxable year to which this part is applicable in accordance with such regulations as the Secretary or his delegate shall prescribe and shall be made not later than the time prescribed by law for filing the return for such year (including extensions thereof). 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. (c) SEPARATE SHARES TREATED AS SEPARATE T R U S T S. — 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. The existence of such substantially separate and independent shares and the manner of treatment as separate trusts, § 662(c)
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