{"data":{"id":"us/26-cfr-1.643-d-2","jurisdiction":"us","citation":"26 CFR 1.643(d)-2","heading":"(d)-2 Illustration of the provisions of section 643.","body":"(a) The provisions of section 643 may be illustrated by the following example:\nExample.\n(1) Under the terms of the trust instrument, the income of a trust is required to be currently distributed to W during her life. Capital gains are allocable to corpus and all expenses are charges against corpus. During the taxable year the trust has the following items of income and expenses:\nDividends from domestic corporations $30,000\nExtraordinary dividends allocated to corpus by the trustee in good faith 20,000\nTaxable interest 10,000\nTax-exempt interest 10,000\nLong-term capital gains 10,000\nTrustee's commissions and miscellaneous expenses allocable to corpus 5,000\n(2) The “income” of the trust determined under section 643(b) which is currently distributable to W is $50,000, consisting of dividends of $30,000, taxable interest of $10,000, and tax-exempt interest of $10,000. The trustee's commissions and miscellaneous expenses allocable to tax-exempt interest amount to $1,000 (10,000/50,000 × $5,000).\n(3) The “distributable net income” determined under section 643(a) amounts to $45,000, computed as follows:\nDividends from domestic corporations $30,000\nTaxable interest 10,000\nNontaxable interest $10,000\nLess: Expenses allocable thereto 1,000\n9,000\nTotal 49,000\nLess: Expenses ($5,000 less $1,000 allocable to tax-exempt interest) 4,000\nDistributable net income 45,000\nIn determining the distributable net income of $45,000, the taxable income of the trust is computed with the following modifications: No deductions are allowed for distributions to W and for personal exemption of the trust (section 643(a) (1) and (2)); capital gains allocable to corpus are excluded and the deduction allowable under section 1202 is not taken into account (section 643(a)(3)): the extraordinary dividends allocated to corpus by the trustee in good faith are excluded (sections 643(a)(4)); and the tax- exempt interest (as adjusted for expenses) and the dividend exclusion of $50 are included) section 643(a) (5) and (7)).\n(b) See paragraph (c) of the example in § 1.661(c)-2 for the computation of distributable net income where there is a charitable contributions deduction.","path":["Title 26—Internal Revenue","CHAPTER I—INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY","SUBCHAPTER A—INCOME TAX","PART 1—INCOME TAXES"],"source_url":"https://www.ecfr.gov/api/versioner/v1/full/2026-08-25/title-26.xml","current_through":"2026-08-25","vintage":"","retrieved_at":"2026-08-27T02:25:11Z","sha256":"cd7b575fcd338053d85f94c9f5de9c3f2afd14dc20c7e7a183be2b940dfab6e4","source_id":"us-cfr","stale":true,"prev":"us/26-cfr-1.643-d-1","next":"us/26-cfr-1.643-f-1"},"notice":"GroundRules: Original legal text. Not legal advice."}