Irc Section 678

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Irc section 678. Go after clicking through the exit link below select the applicable year select 26 for the title and then enter the section number. Person other than grantor treated as substantial owner. Is taxed under irc 678 a but if grantor is living any grantor spouse s 673 677 power trumps 678 pursuant to 678 b.

Overview of grantor trust rules and section 678 under section 671 a trust is treated as a grantor trust for federal income tax purposes if it falls under cir cumstances described in one or more of sections 673 679. Irc section 678 is poorly drafted and is the source of confusion. 678 a 2 such person has previously partially released or otherwise modified such a power and after the release or modification retains such control as would within the principles of sections 671 to 677 inclusive subject a grantor of a trust to treatment as the owner thereof.

A general rulea person other than the grantor shall be treated as the owner of any portion of a trust with respect to which. Execute full text search of the most current edition of 26 c f r. Internal revenue code 678.

Findlaw codes are provided courtesy of thomson reuters westlaw the industry leading online legal research system. For more detailed codes research information including annotations and citations please visit westlaw. The 678 trust is named after the internal revenue code section upon which it is based which states that a beneficiary who has a withdrawal right under a crummey trust will be treated as the owner for income tax purposes of the portion of the trust over which the withdrawal power lapsed.

Person other than grantor treated as substantial owner 679. From the face of the statute it appears that a person with power exercisable solely by himself to vest the corpus or the income therefrom in himself will be the deemed tax owner. Foreign trusts having one or more united states beneficiaries.

Thus a slat or ilit even w crummey powers is typically a grantor trust as to the settlor. To the extent a trust is a grantor trust the income deductions and credits of the trust are attributed to the grantor or to a person other than the grantor treated as a substantial owner under section 678.