56 STAT.] 77TH CONG., 2D SESS.-CH. 619-OCT. 21 , 1942 SEC. 111. INCOME RECEIVED FROM ESTATES, ETC, UNDER GIFTS, BEQUESTS, ETC. (a) GIFT OF INCOME FROM PROPERTY NOT EXCLUDED FROM GROSS INCOME.- Section 22 (b) (3) (relating to exclusion of gifts, etc., from gross income) is amended to read as follows: "(3) GIrrs, BEQUESTS, DEVISES, AND INHERITANCES. -The value of property acquired by gift, bequest, devise, or inheritance. There shall not be excluded from gross income under this para- graph, the income from such property, or, in case the gift, bequest, devise, or inheritance is of income from property, the amount of such income. For the purposes of this paragraph, if, under the terms of the gift, bequest, devise, or inheritance, pay- ment, crediting, or distribution thereof is to be made at inter- vals, to the extent that it is paid or credited or to be distributed out of income from property, it shall be considered a gift, bequest, devise, or inheritance of income from property;". (b) DEDUCTION OF INCOME To BE DISTRIBUTED CURRENTLY. -Sec- tion 162 (b) (relating to deduction of income to be distributed cur- rently) is amended to read as follows: "(b) There shall be allowed as an additional deduction in com- puting the net income of the estate or trust the amount of the income of the estate or trust for its taxable year which is to be distributed currently by the fiduciary to the legatees, heirs, or beneficiaries, but the amount so allowed as a deduction shall be included in computing the net income of the legatees, heirs, or beneficiaries whether distrib- uted to them or not. As used in this subsection, 'income which is to be distributed currently' includes income for the taxable year of the estate or trust which, within the taxable year, becomes payable to the legatee, heir, or beneficiary. Any amount allowed as a deduction under this paragraph shall not be allowed as a deduction under sub- section (c) of this section in the same or any succeeding taxable year ;" (C) TRUST INCOME INCLUDED IN INCOME OF BENEFICIARY, ETC. - Section 162 (relating to net income of estates or trusts) is amended by striking out the period at the end of subsection (c) and inserting in lieu thereof a semicolon and the following new subsection: "(d) RULES FOR APPLICATION OF SUBSECTIONS (b) AND (c).- For the purposes of subsections (b) and (c)- "(1) AMOUNTS DISTRIBUTABLE OUT OF INCOME OR CORPUS. - In cases where the amount paid, credited, or to be distributed can be paid, credited, or distributed out of other than income, the amount paid, credited, or to be distributed (except under a gift, bequest devise, or inheritance not to be paid, credited, or dis- tributed at intervals) during the taxable year of the estate or trust shall be considered as income of the estate or trust which is paid, credited, or to be distributed if the aggregate of such amounts so paid, credited, or to be distributed does not exceed the distributable income of the estate or trust for its taxable year. If the aggregate of such amounts so paid, credited, or to be dis- tributed during the taxable year of the estate or trust in such cases exceeds the distributable income of the estate or trust for its taxable year the amount so paid, credited, or to be distributed to any legatee, heir, or beneficiary shall be considered income of the estate or trust for its taxable year which is paid, credited, or to be distributed in an amount which bears the same ratio to the amount of such distributable income as the amount so paid, credited, or to be distributed to the legatee, heir, or beneficiary 809 53 Stat. 10 . 26 U. 8.. . 22 (b) (3). 53 Stat. 66. 26U.S . C . 162(b). 53 Stat. 67. 26 U. S.. . 162 (c). 53 Stat. 66 . 26U. .C. 162. Supra.
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