246 
‘‘(c) SPECIAL RULE FOR MULTIPLE TRUSTS.— 
‘‘(1) IN GENERAL.—If, in the same prior tax-
able year of the beneficiary in which any part of the 
accumulation distribution from a trust (hereinafter 
in this paragraph referred to as ‘third trust’) is 
deemed under section 151(a) to have been distrib-
uted to such beneficiary, some part of prior distribu-
tions by each of 2 or more other trusts is deemed 
under section 151(a) to have been distributed to 
such beneficiary, then subsections (b) and (c) of sec-
tion 151 shall not apply with respect to such part 
of the accumulation distribution from such third 
trust. 
‘‘(2) ACCUMULATION
DISTRIBUTIONS
FROM 
TRUST NOT TAKEN INTO ACCOUNT UNLESS THEY 
EQUAL OR EXCEED $1,000.—For purposes of para-
graph (1), an accumulation distribution from a trust 
to a beneficiary shall be taken into account only if 
such distribution, when added to any prior accumu-
lation distributions from such trust which are 
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.
247 
‘‘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. 
‘‘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
248 
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 
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.
249 
‘‘(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 
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.—
250 
‘‘(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 
‘‘(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.
251 
‘‘(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— 
‘‘(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