CH. 1 (d)
NORMAL TAXES AND SURTAXES
227
RULE W H E R E P O W E R I S SUBJECT TO CONDITION P R E C E D E N T. —
A person shall be considered to have a power described in this subpart 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. SEC. 673. 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 interest will or may reasonably be expected to take effect in possession or enjoyment within 10 years commencing with the date of the transfer of that portion of the trust. (b) EXCEPTION
WHERE
INCOME
IS
PAYABLE
TO
CHARITABLE
BENEFICIARIES.—Subsection (a) shall not apply to the extent that the income of a portion of a trust in which the grantor has a reversionary interest is, under the terms of the trust, irrevocably payable for a period of a t least 2 years (commencing with the date of the transfer) to a designated beneficiary, which beneficiary is of a type described in section 170(b)(1)(A)(i), (ii), or (iii). (c) REVERSIONARY INTEREST TAKING E F F E C T AT D E A T H O F INCOME BE^^JEFICIARY.—The grantor shall not be treated under sub-
section (a) as the o^vner of any portion of a trust where his reversionary interest in such portion is not to take effect in possession or enjoyment until the death of the person or persons to whom the income therefrom is payable. (d) POSTPONEMENT OF D A T E SPECIFIED FOR REACQUISITION.—Any
postponement of the date specified for the reacquisition of possession or enjoyment of the reversionary interest shall be treated as a new transfer in trust commencing with the date on which the postponement is effected 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 includible in the absence of such postponement. SEC. 674. 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 therefrom 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.—Subsection (a) shall not apply to the following powers regardless of by whom held: (1) P O W E R TO APPLY INCOME TO SUPPORT OF A DEPENDENT.—A
power described in section 677(b) to the extent that the grantor would not be subject to tax under that section. (2) P O W E R
AFFECTING
BENEFICIAL
ENJOYMENT
ONLY
AFTER
EXPIRATION OF 10-YEAR PERIOD.—A powcr, the cxercise of which can only affect the beneficial enjoyment of the income for a period commencing after the expiration of a period such that a grantor would not be treated as the owner under section 673 if the power were a reversionary interest; but the grantor may be treated as the § 674(b)(2)
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