Taxable Distribution [Internal Revenue] Law and Legal Definition

Pursuant to 26 CFR 26.2612-1 (c) [Title 26 Internal Revenue; Chapter I Internal Revenue Service, Department of the Treasury; Subchapter B Estate and Gift Taxes; Part 26 Generation-Skipping Transfer Tax Regulations under the Tax Reform Act of 1986], the term Taxable Distribution “is a distribution of income or principal from a trust to a skip person unless the distribution is a taxable termination or a direct skip. If any portion of GST tax (including penalties and interest thereon) imposed on a distributee is paid from the distributing trust, the payment is an additional taxable distribution to the distributee. For purposes of chapter 13, the additional distribution is treated as having been made on the last day of the calendar year in which the original taxable distribution is made. If Federal estate or gift tax is imposed on any individual with respect to an interest in property held by a trust, the interest in property is treated as having been distributed to the individual to the extent that the value of the interest is subject to Federal estate or gift tax.”