235
‘‘(ii) any person who, at the time of
such allocation or at any time during the
1-year period ending on the date of the ac-
quisition of qualified employer securities by
the plan, is a 5-percent shareholder of the
employer maintaining the plan, the plan
shall be treated as having distributed (at
the time of such allocation) to such person
or shareholder the amount so allocated.
‘‘(B) 
5-PERCENT
SHAREHOLDER.—For
purposes of subparagraph (A), the term ‘5-per-
cent shareholder’ means any person who owns
(directly or through the application of construc-
tive ownership rules) more than 5 percent of
the outstanding stock of the corporation which
issued such qualified employer securities or of
any corporation which is a member of the same
controlled group of corporations (within the
meaning of section 409(l)(4)) as such corpora-
tion.
‘‘(C) CROSS REFERENCE.—For excise tax
on allocations described in subparagraph (A),
see section 4979A.
‘‘(6) 
TAX
ON
FAILURE
TO
TRANSFER
UNALLOCATED SECURITIES TO CHARITY ON TERMI-
236
NATION OF PLAN.—If the requirements of paragraph
(3)(F) are not met with respect to any securities,
there is hereby imposed a tax on the employer main-
taining the plan in an amount equal to the sum of—
‘‘(A) the amount of the increase in the tax
which would be imposed by chapter 11 if such
securities were not transferred as described in
paragraph (1), and
‘‘(B) interest on such amount at the un-
derpayment rate under section 6621 (and com-
pounded daily) from the due date for filing the
return of the tax imposed by chapter 11.
‘‘SEC. 150. DEFINITIONS APPLICABLE TO EXCESS DISTRIBU-
TION RULES.
‘‘(a) UNDISTRIBUTED NET INCOME.—For purposes
of sections 150 through 152, the term ‘undistributed net
income’ for any taxable year means the amount by which
the distributable net income of the trust for such taxable
year exceeds the sum of—
‘‘(1) the amounts for such taxable year speci-
fied in paragraphs (1) and (2) of section 146(a),
and
‘‘(2) the amount of taxes imposed on the trust
attributable to such distributable net income.
237
‘‘(b) ACCUMULATION DISTRIBUTION.—For purposes
of sections 150 through 152, except as provided in sub-
section (c), the term ‘accumulation distribution’ means,
for any taxable year of the trust, the amount by which—
‘‘(1) the amounts specified in paragraph (2) of
section 146(a) for such taxable year, exceed
‘‘(2) distributable net income for such year re-
duced (but not below zero) by the amounts specified
in paragraph (1) of section 146(a).
For purposes of section 152 (other than subsection (c)
thereof, relating to multiple trusts), the amounts specified
in paragraph (2) of section 146(a) shall not include
amounts properly paid, credited, or required to be distrib-
uted to a beneficiary from a trust (other than a foreign
trust) as income accumulated before the birth of such ben-
eficiary or before such beneficiary attains the age of 21.
If the amounts properly paid, credited, or required to be
distributed by the trust for the taxable year do not exceed
the income of the trust for such year, there shall be no
accumulation distribution for such year.
‘‘(c) EXCEPTION
FOR ACCUMULATION DISTRIBU-
TIONS FROM CERTAIN DOMESTIC TRUSTS.—For purposes
of sections 150 through 152—
‘‘(1) IN GENERAL.—In the case of a qualified
trust, any distribution in any taxable year beginning
238
after the date of the enactment of this subsection
shall be computed without regard to any undistrib-
uted net income.
‘‘(2) QUALIFIED TRUST.—For purposes of this
subsection, the term ‘qualified trust’ means any
trust other than—
‘‘(A) a foreign trust (or, except as provided
in regulations, a domestic trust which at any
time was a foreign trust), or
‘‘(B) a trust created before March 1, 1984,
unless it is established that the trust would not
be aggregated with other trusts under section
143(f) if such section applied to such trust.
‘‘(d) TAXES IMPOSED ON THE TRUST.—For purposes
of sections 150 through 152—
‘‘(1) IN GENERAL.—The term ‘taxes imposed
on the trust’ means the amount of the taxes which
are imposed for any taxable year of the trust under
this chapter (without regard to sections 150 through
152) and which, under regulations prescribed by the
Secretary, are properly allocable to the undistributed
portions of distributable net income and gains in ex-
cess of losses from sales or exchanges of capital as-
sets. The amount determined in the preceding sen-
tence shall be reduced by any amount of such taxes
239
deemed distributed under section 151(b) and (c) to
any beneficiary.
‘‘(2) FOREIGN TRUSTS.—In the case of any for-
eign trust, the term ‘taxes imposed on the trust’ in-
cludes the amount, reduced as provided in the last
sentence of paragraph (1), of any income, war prof-
its, and excess profits taxes imposed by any foreign
country or possession of the United States on such
foreign trust which, as determined under paragraph
(1), are so properly allocable. Under rules or regula-
tions prescribed by the Secretary, in the case of any
foreign trust of which the settlor or another person
would be treated as owner of any portion of the
trust but for section 154(f), the term ‘taxes imposed
on the trust’ includes the allocable amount of any
income, war profits, and excess profits taxes imposed
by any foreign country or possession of the United
States on the settlor or such other person in respect
of trust income.
‘‘SEC. 151. ACCUMULATION DISTRIBUTION ALLOCATED TO
PRECEDING YEARS.
‘‘(a) AMOUNT ALLOCATED.—In the case of a trust
which is subject to sections 146 through 149, the amount
of the accumulation distribution of such trust for a taxable
year shall be deemed to be an amount within the meaning
240
of paragraph (2) of section 146(a) distributed on the last
day of each of the preceding taxable years, commencing
with the earliest of such years, to the extent that such
amount exceeds the total of any undistributed net income
for all earlier preceding taxable years. The amount deemed
to be distributed in any such preceding taxable year under
the preceding sentence shall not exceed the undistributed
net income for such preceding taxable year. For purposes
of this subsection, undistributed net income for each of
such preceding taxable years shall be computed without
regard to such accumulation distribution and without re-
gard to any accumulation distribution determined for any
succeeding taxable year.
‘‘(b) TOTAL TAXES DEEMED DISTRIBUTED.—If any
portion of an accumulation distribution for any taxable
year is deemed under subsection (a) to be an amount with-
in the meaning of paragraph (2) of section 146(a) distrib-
uted on the last day of any preceding taxable year, and
such portion of such distribution is not less than the un-
distributed 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 with-
in the meaning of paragraph (2) of section 146(a). Such
additional amount shall be equal to the taxes imposed on
the trust for such preceding taxable year attributable to
241
the undistributed net income. For purposes of this sub-
section, the undistributed net income and the taxes im-
posed on the trust for such preceding taxable year attrib-
utable to such undistributed net income shall be computed
without regard to such accumulation distribution and
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 preced-
ing taxable year attributable to such undistributed net in-
242
come 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
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-
243
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
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 preced-
ing 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
244
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-
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
245
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
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
247
deemed under section 151(a) to have been distrib-
uted to such beneficiary for the same prior taxable
year of the beneficiary, equals or exceeds $1,000.
‘‘SEC. 153. TRUST INCOME, DEDUCTIONS, AND CREDITS AT-
TRIBUTABLE TO GRANTORS AND OTHERS AS
SUBSTANTIAL OWNERS.
‘‘Where it is specified in sections 153 through 161
that the grantor or another person shall be treated as the
owner of any portion of a trust, there shall then be in-
cluded in computing the taxable income and credits of the
grantor or the other person those items of income, deduc-
tions, and credits against tax of the trust which are attrib-
utable to that portion of the trust to the extent that such
items would be taken into account under this chapter in
computing taxable income or credits against the tax of an
individual. Any remaining portion of the trust shall be
subject to sections 140 through 152. No items of a trust
shall be included in computing the taxable income and
credits of the grantor or of any other person solely on the
grounds of his dominion and control over the trust under
section 61 (relating to definition of gross income) or any
other provision of this title, except as specified in this sub-
part.
248
‘‘SEC. 154. DEFINITIONS AND RULES.
‘‘(a) ADVERSE PARTY.—For purposes of sections 153
through 160, ‘adverse party’ means any person having a
substantial beneficial interest in the trust which would be
adversely affected by the exercise or nonexercise of the
power which he possesses respecting the trust. A person
having a general power of appointment over the trust
property shall be deemed to have a beneficial interest in
the trust.
‘‘(b) NONADVERSE PARTY.—For purposes of sections
153 through 160, ‘nonadverse party’ means any person
who is not an adverse party.
‘‘(c) RELATED OR SUBORDINATE PARTY.—For pur-
poses of sections 153 through 161, ‘related or subordinate
party’ means any nonadverse party who is—
‘‘(1) the grantor’s spouse if living with the
grantor;
‘‘(2) any one of the following: The grantor’s fa-
ther, mother, issue, brother or sister; an employee of
the grantor; a corporation or any employee of a cor-
poration in which the stock holdings of the grantor
and the trust are significant from the viewpoint of
voting control; a subordinate employee of a corpora-
tion in which the grantor is an executive.
For purposes of subsection (f) and sections 156 and 157,
a related or subordinate party shall be presumed to be
249
subservient to the grantor in respect of the exercise or
nonexercise of the powers conferred on him unless such
party is shown not to be subservient by a preponderance
of the evidence.
‘‘(d) RULE WHERE POWER IS SUBJECT TO CONDI-
TION PRECEDENT.—A person shall be considered to have
a power described in sections 153 through 161 even
though the exercise of the power is subject to a precedent
giving of notice or takes effect only on the expiration of
a certain period after the exercise of the power.
‘‘(e) GRANTOR TREATED AS HOLDING ANY POWER
OR INTEREST OF GRANTOR’S SPOUSE.—
‘‘(1) IN GENERAL.—For purposes of sections
153 through 160, a grantor shall be treated as hold-
ing any power or interest held by—
‘‘(A) any individual who was the spouse of
the grantor at the time of the creation of such
power or interest, or
‘‘(B) any individual who became the spouse
of the grantor after the creation of such power
or interest, but only with respect to periods
after such individual became the spouse of the
grantor.
‘‘(2) MARITAL STATUS.—For purposes of para-
graph (1)(A), an individual legally separated from
250
his spouse under a decree of divorce or of separate
maintenance shall not be considered as married.
‘‘(f) RULES NOT TO RESULT IN FOREIGN OWNER-
SHIP.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision in sections 153 through 160, sections 153
through 160 shall apply only to the extent such ap-
plication results in an amount (if any) being cur-
rently taken into account (directly or through 1 or
more entities) under this chapter in computing the
income of a citizen or resident of the United States
or a domestic corporation.
‘‘(2) EXCEPTIONS.—
‘‘(A) CERTAIN
REVOCABLE
AND
IRREV-
OCABLE
TRUSTS.—Paragraph (1) shall not
apply to any portion of a trust if—
‘‘(i) the power to revest absolutely in
the grantor title to the trust property to
which such portion is attributable is exer-
cisable solely by the grantor without the
approval or consent of any other person or
with the consent of a related or subordi-
nate party who is subservient to the grant-
or, or
251
‘‘(ii) the only amounts distributable
from such portion (whether income or cor-
pus) during the lifetime of the grantor are
amounts distributable to the grantor or the
spouse of the grantor.
‘‘(B) COMPENSATORY TRUSTS.—Except as
provided in regulations, paragraph (1) shall not
apply to any portion of a trust distributions
from which are taxable as compensation for
services rendered.
‘‘(3) SPECIAL
RULES.—Except as otherwise
provided in regulations prescribed by the Secretary,
a controlled foreign corporation shall be treated as
a domestic corporation for purposes of paragraph
(1).
‘‘(4) RECHARACTERIZATION
OF
PURPORTED
GIFTS.—In the case of any transfer directly or indi-
rectly from a partnership or foreign corporation
which the transferee treats as a gift or bequest, the
Secretary may recharacterize such transfer in such
circumstances as the Secretary determines to be ap-
propriate to prevent the avoidance of the purposes of
this subsection.
‘‘(5) SPECIAL RULE WHERE GRANTOR IS FOR-
EIGN PERSON.—If—
252
‘‘(A) but for this subsection, a foreign per-
son would be treated as the owner of any por-
tion of a trust, and
‘‘(B) such trust has a beneficiary who is a
United States person,
such beneficiary shall be treated as the grantor of
such portion to the extent such beneficiary has made
(directly or indirectly) transfers of property (other
than in a sale for full and adequate consideration)
to such foreign person.
‘‘(6) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section, including regulations providing that para-
graph (1) shall not apply in appropriate cases.
‘‘SEC. 155. REVERSIONARY INTERESTS.
‘‘(a) GENERAL RULE.—The grantor shall be treated
as the owner of any portion of a trust in which he has
a reversionary interest in either the corpus or the income
therefrom, if, as of the inception of that portion of the
trust, the value of such interest exceeds 5 percent of the
value of such portion.
‘‘(b) REVERSIONARY INTEREST TAKING EFFECT AT
DEATH
OF
MINOR
LINEAL
DESCENDANT
BENE-
FICIARY.—In the case of any beneficiary who—
253
‘‘(1) is a lineal descendant of the grantor, and
‘‘(2) holds all of the present interests in any
portion of a trust,
the grantor shall not be treated under subsection (a) as
the owner of such portion solely by reason of a reversion-
ary interest in such portion which takes effect upon the
death of such beneficiary before such beneficiary attains
age 21.
‘‘(c) SPECIAL RULE FOR DETERMINING VALUE OF
REVERSIONARY INTEREST.—For purposes of subsection
(a), the value of the grantor’s reversionary interest shall
be determined by assuming the maximum exercise of dis-
cretion in favor of the grantor.
‘‘(d) POSTPONEMENT OF DATE SPECIFIED FOR RE-
ACQUISITION.—Any postponement of the date specified for
the reacquisition of possession or enjoyment of the rever-
sionary interest shall be treated as a new transfer in trust
commencing with the date on which the postponement is
effective and terminating with the date prescribed by the
postponement. However, income for any period shall not
be included in the income of the grantor by reason of the
preceding sentence if such income would not be so includ-
ible in the absence of such postponement.
254
‘‘SEC. 156. POWER TO CONTROL BENEFICIAL ENJOYMENT.
‘‘(a) GENERAL RULE.—The grantor shall be treated
as the owner of any portion of a trust in respect of which
the beneficial enjoyment of the corpus or the income there-
from is subject to a power of disposition, exercisable by
the grantor or a nonadverse party, or both, without the
approval or consent of any adverse party.
‘‘(b) EXCEPTIONS
FOR CERTAIN POWERS.—Sub-
section (a) shall not apply to the following powers regard-
less of by whom held:
‘‘(1) POWER TO APPLY INCOME TO SUPPORT OF
A
DEPENDENT.—A power described in section
159(b) to the extent that the grantor would not be
subject to tax under that section.
‘‘(2) POWER
AFFECTING
BENEFICIAL
ENJOY-
MENT
ONLY
AFTER
OCCURRENCE
OF
EVENT.—A
power, the exercise of which can only affect the ben-
eficial enjoyment of the income for a period com-
mencing after the occurrence of an event such that
a grantor would not be treated as the owner under
section 155 if the power were a reversionary inter-
est; but the grantor may be treated as the owner
after the occurrence of the event unless the power is
relinquished.
‘‘(3) POWER EXERCISABLE ONLY BY WILL.—A
power exercisable only by will, other than a power in
255
the grantor to appoint by will the income of the
trust where the income is accumulated for such dis-
position by the grantor or may be so accumulated in
the discretion of the grantor or a nonadverse party,
or both, without the approval or consent of any ad-
verse party.
‘‘(4) POWER TO ALLOCATE AMONG CHARITABLE
BENEFICIARIES.—A power to determine the bene-
ficial enjoyment of the corpus or the income there-
from if the corpus or income is irrevocably payable
for a purpose specified in section 101(c) (relating to
definition of charitable contributions) or to an em-
ployee stock ownership plan (as defined in section
4975(e)(7)) in a qualified gratuitous transfer (as de-
fined in section 149(g)(1)).
‘‘(5) POWER
TO
DISTRIBUTE
CORPUS.—A
power to distribute corpus either—
‘‘(A) to or for a beneficiary or beneficiaries
or to or for a class of beneficiaries (whether or
not income beneficiaries) provided that the
power is limited by a reasonably definite stand-
ard which is set forth in the trust instrument;
or
‘‘(B) to or for any current income bene-
ficiary, provided that the distribution of corpus
256
must be chargeable against the proportionate
share of corpus held in trust for the payment
of income to the beneficiary as if the corpus
constituted a separate trust.
A power does not fall within the powers described in
this paragraph if any person has a power to add to
the beneficiary or beneficiaries or to a class of bene-
ficiaries designated to receive the income or corpus,
except where such action is to provide for after-born
or after-adopted children.
‘‘(6) POWER
TO
WITHHOLD
INCOME
TEMPO-
RARILY.—A power to distribute or apply income to
or for any current income beneficiary or to accumu-
late the income for him, provided that any accumu-
lated income must ultimately be payable—
‘‘(A) to the beneficiary from whom dis-
tribution or application is withheld, to his es-
tate, or to his appointees (or persons named as
alternate takers in default of appointment) pro-
vided that such beneficiary possesses a power of
appointment which does not exclude from the
class of possible appointees any person other
than the beneficiary, his estate, his creditors, or
the creditors of his estate, or
257
‘‘(B) on termination of the trust, or in con-
junction with a distribution of corpus which is
augmented by such accumulated income, to the
current income beneficiaries in shares which
have been irrevocably specified in the trust in-
strument.
Accumulated income shall be considered so payable
although it is provided that if any beneficiary does
not survive a date of distribution which could rea-
sonably have been expected to occur within the bene-
ficiary’s lifetime, the share of the deceased bene-
ficiary is to be paid to his appointees or to one or
more designated alternate takers (other than the
grantor or the grantor’s estate) whose shares have
been irrevocably specified. A power does not fall
within the powers described in this paragraph if any
person has a power to add to the beneficiary or
beneficiaries or to a class of beneficiaries designated
to receive the income or corpus except where such
action is to provide for after-born or after-adopted
children.
‘‘(7) POWER
TO
WITHHOLD
INCOME
DURING
DISABILITY
OF
A
BENEFICIARY.—A power exer-
cisable only during—
258
‘‘(A) the existence of a legal disability of
any current income beneficiary, or
‘‘(B) the period during which any income
beneficiary shall be under the age of 21 years,
to distribute or apply income to or for such bene-
ficiary or to accumulate and add the income to cor-
pus. A power does not fall within the powers de-
scribed in this paragraph if any person has a power
to add to the beneficiary or beneficiaries or to a
class of beneficiaries designated to receive the in-
come or corpus, except where such action is to pro-
vide for after-born or after-adopted children.
‘‘(8) POWER TO ALLOCATE BETWEEN CORPUS
AND INCOME.—A power to allocate receipts and dis-
bursements as between corpus and income, even
though expressed in broad language.
‘‘(c) EXCEPTION FOR CERTAIN POWERS OF INDE-
PENDENT TRUSTEES.—Subsection (a) shall not apply to
a power solely exercisable (without the approval or consent
of any other person) by a trustee or trustees, none of
whom is the grantor, and no more than half of whom are
related or subordinate parties who are subservient to the
wishes of the grantor—
259
‘‘(1) to distribute, apportion, or accumulate in-
come to or for a beneficiary or beneficiaries, or to,
for, or within a class of beneficiaries; or
‘‘(2) to pay out corpus to or for a beneficiary
or beneficiaries or to or for a class of beneficiaries
(whether or not income beneficiaries).
A power does not fall within the powers described in this
subsection if any person has a power to add to the bene-
ficiary or beneficiaries or to a class of beneficiaries des-
ignated to receive the income or corpus, except where such
action is to provide for after-born or after-adopted chil-
dren. For periods during which an individual is the spouse
of the grantor (within the meaning of section 154(e)(2)),
any reference in this subsection to the grantor shall be
treated as including a reference to such individual.
‘‘(d) POWER TO ALLOCATE INCOME IF LIMITED BY
A STANDARD.—Subsection (a) shall not apply to a power
solely exercisable (without the approval or consent of any
other person) by a trustee or trustees, none of whom is
the grantor or spouse living with the grantor, to distribute,
apportion, or accumulate income to or for a beneficiary
or beneficiaries, or to, for, or within a class of bene-
ficiaries, whether or not the conditions of paragraph (6)
or (7) of subsection (b) are satisfied, if such power is lim-
ited by a reasonably definite external standard which is