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2. Subchapter J Income Attribution Rules
The income attribution rules of subchapter J give effect to
the distinction made by section 102 between gifts and
inheritances of property, which are excluded from a recipient's
gross income, sec. 102(a), and the income derived therefrom, sec.
102(b)(1), and gifts of income from property, sec. 102(b)(2);
Irwin v. Gavit, 268 U.S. 161 (1925), which are included in a
recipient’s gross income. Subchapter J retains the conduit
principle of the 1939 Code to pass income from an estate or trust
to its beneficiaries, see H. Rept. 1337, 83d Cong., 2d Sess. 61
(1954); Kitch v. Commissioner, 104 T.C. 1, 11 (1995), affd. on
other grounds 103 F.3d 104 (10th Cir. 1996), while introducing
the mechanism of DNI to determine the amount and character of
that income “to avoid both the necessity of ‘tracing’ and an
inquiry into the subjective intention of executors”. Harkness v.
United States, 199 Ct. Cl. 721, 727, 469 F.2d 310, 316 (1973);
see also H. Rept. 1337, supra; Kitch v. Commissioner, supra. A
distribution included in the gross income of a beneficiary under
subchapter J is “treated * * * as a gift, bequest, devise, or
inheritance of income from property.” Sec. 102(b).
9(...continued)
recipient of Florida statutory dower and estate beneficiaries
that those beneficiaries would reimburse her for Federal income
tax paid by her on receipt of an advance payment of statutory
dower).
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