241 
without regard to any accumulation distribution deter-
mined for any succeeding taxable year. 
‘‘(c) PRO RATA PORTION OF TAXES DEEMED DIS-
TRIBUTED.—If any portion of an accumulation distribu-
tion for any taxable year is deemed under subsection (a) 
to be an amount within the meaning of paragraph (2) of 
section 146(a) distributed on the last day of any preceding 
taxable year and such portion of the accumulation dis-
tribution is less than the undistributed net income for such 
preceding taxable year, the trust shall be deemed to have 
distributed on the last day of such preceding taxable year 
an additional amount within the meaning of paragraph (2) 
of section 146(a). Such additional amount shall be equal 
to the taxes imposed on the trust for such taxable year 
attributable to the undistributed net income multiplied by 
the ratio of the portion of the accumulation distribution 
to the undistributed net income of the trust for such year. 
For purposes of this subsection, the undistributed net in-
come and the taxes imposed on the trust for such pre-
ceding taxable year attributable to such undistributed net 
income shall be computed without regard to the accumula-
tion distribution and without regard to any accumulation 
distribution determined for any succeeding taxable year. 
‘‘(d) RULE WHEN INFORMATION IS
NOT AVAIL-
ABLE.—If adequate records are not available to determine
242 
the proper application of this subchapter to an amount 
distributed by a trust, such amount shall be deemed to 
be an accumulation distribution consisting of undistrib-
uted net income earned during the earliest preceding tax-
able year of the trust in which it can be established that 
the trust was in existence. 
‘‘(e) DENIAL OF REFUND TO TRUSTS AND BENE-
FICIARIES.—No refund or credit shall be allowed to a trust 
or a beneficiary of such trust for any preceding taxable 
year by reason of a distribution deemed to have been made 
by such trust in such year under this section. 
‘‘SEC. 152. TREATMENT OF AMOUNTS DEEMED DISTRIB-
UTED BY TRUST IN PRECEDING YEARS. 
‘‘(a) GENERAL RULE.—The total of the amounts 
which are treated under section 151 as having been dis-
tributed by a trust in a preceding taxable year shall be 
included in the income of a beneficiary of the trust when 
paid, credited, or required to be distributed to the extent 
that such total would have been included in the income 
of such beneficiary under section 147(a)(2) (and, with re-
spect to any tax-exempt interest to which section 103 ap-
plies, under section 147(b)) if such total had been paid 
to such beneficiary on the last day of such preceding tax-
able year. The tax imposed by this subtitle on a beneficiary 
for a taxable year in which any such amount is included
243 
in his income shall be determined only as provided in this 
section and shall consist of the sum of— 
‘‘(1) a partial tax computed on the taxable in-
come reduced by an amount equal to the total of 
such amounts, at the rate and in the manner as if 
this section had not been enacted, 
‘‘(2) a partial tax determined as provided in 
subsection (b) of this section, and 
‘‘(3) in the case of a foreign trust, the interest 
charge determined as provided in section 152. 
‘‘(b) TAX ON DISTRIBUTION.— 
‘‘(1) IN GENERAL.—The partial tax imposed by 
subsection (a)(2) shall be determined. 
‘‘(A) by determining the number of pre-
ceding taxable years of the trust on the last day 
of which an amount is deemed under section 
151(a) to have been distributed, 
‘‘(B) by taking from the 5 taxable years 
immediately preceding the year of the accumu-
lation distribution the 1 taxable year for which 
the beneficiary’s taxable income was the highest 
and the 1 taxable year for which his taxable in-
come was the lowest, 
‘‘(C) by adding to the beneficiary’s taxable 
income for each of the 3 taxable years remain-
244 
ing after the application of subparagraph (B) 
an amount determined by dividing the amount 
deemed distributed under section 151 and re-
quired to be included in income under sub-
section (a) by the number of preceding taxable 
years determined under subparagraph (A), and 
‘‘(D) by determining the average increase 
in tax for the 3 taxable years referred to in sub-
paragraph (C) resulting from the application of 
such subparagraph. 
The partial tax imposed by subsection (a)(2) shall be 
the excess (if any) of the average increase in tax de-
termined under subparagraph (D), multiplied by the 
number of preceding taxable years determined under 
subparagraph (A), over the amount of taxes (other 
than the amount of taxes described in section 
150(d)(2)) deemed distributed to the beneficiary 
under sections 151 (b) and (c). 
‘‘(2) TREATMENT OF LOSS YEARS.—For pur-
poses of paragraph (1), the taxable income of the 
beneficiary for any taxable year shall be deemed to 
be not less than zero. 
‘‘(3) CERTAIN PRECEDING TAXABLE YEARS NOT 
TAKEN INTO ACCOUNT.—For purposes of paragraph 
(1), if the amount of the undistributed net income
245 
deemed distributed in any preceding taxable year of 
the trust is less than 25 percent of the amount of 
the accumulation distribution divided by the number 
of preceding taxable years to which the accumulation 
distribution is allocated under section 151(a), the 
number of preceding taxable years of the trust with 
respect to which an amount is deemed distributed to 
a beneficiary under section 151(a) shall be deter-
mined without regard to such year. 
‘‘(4) EFFECT OF OTHER ACCUMULATION DIS-
TRIBUTIONS.—In computing the partial tax under 
paragraph (1) for any beneficiary, the income of 
such beneficiary for each of his prior taxable years 
shall include amounts previously deemed distributed 
to such beneficiary in such year under section 151 
as a result of prior accumulation distributions 
(whether from the same or another trust). 
‘‘(5) MULTIPLE DISTRIBUTIONS IN THE SAME 
TAXABLE YEAR.—In the case of accumulation dis-
tributions made from more than one trust which are 
includible in the income of a beneficiary in the same 
taxable year, the distributions shall be deemed to 
have been made consecutively in whichever order the 
beneficiary shall determine. Generation-skipping 
transfer bears to the total accumulation distribution.