IRC § 671 Trust income, deductions, and credits attributable to grantors and others as substantial owners

The text below is the full statutory language of IRC § 671, which sets out the core rule for how trust items are taxed when a person is treated as the “owner” of a portion of a trust under the grantor-trust rules. When any part of a trust is treated as owned by the grantor (or another person), the income, deductions, and credits attributable to that portion are reported directly on that person’s individual income tax return.

Statutory Text

IRC § 671 Trust income, deductions, and credits attributable to grantors and others as substantial owners

Where it is specified in this subpart that the grantor or another person shall be treated as the owner of any portion of a trust, there shall then be included in computing the taxable income and credits of the grantor or the other person those items of income, deductions, and credits against tax of the trust which are attributable 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 subparts A through D. 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 subpart.