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INCOME TAX PROJECT 1 (NOTE RE PRELIMINARY DRAFT 130, February 19, 1953)

handle is hein.ali/aliftp0135 and id is 1 raw text is: February 19, 1953

Note re Preliminary Draft No. 130
Trusts and Ektates
The principal changes in Preliminary Draft No. 130 from Preliminary
Drafts Nos. 122 and 125 represent in the main matters discussed at the
Policy Committee meeting on November 20, 1952. They are:
1. Section X806. Distributable Net Income.
The new Draft uses, as the definition of distributable net income,
essentially the statutory net income excepting capital gains and losses.
Thus, the trust beneficiary obtains the benefit of the tax deductions of
the trUst even where those deductions are :hargeable to corpus. If
capital gains and losses enter into the computation of the amount dis-
tributable to the beneficiary, then they also enter into distributable net
income.
Further, with respect to distributable net income, the third sentence
of section X802 has been added to handle, under Regulations, the problem
of allocating deductions among the different classes of income items in-
cluded in distributable net income,
2, Section X827. Charitable Contributions.
This section is redrafted to more clearly state the mechanics for
deducting the charitable contributions of the trust.
3. Section X852. Insurance Trusts.
Section X852(c)(2) is added to relieve the grantor of tax on trust
income, available for the payment of premiums on insurance on his life,
in those situations in which all the rights in the policy are owned by the

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