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specific bequests of property and bequests from the residuary
estate, see, e.g., Park Lake Presbyterian Church v. Estate of
Henry, 106 So. 2d 215, 217 (Fla. Dist. Ct. App. 1958). Although
the Code does not expressly state that section 663(a)(1) gifts or
bequests are excluded from a recipient's gross income under
section 102(a), the regulations, section 1.102-1(d), Income Tax
Regs., “acknowledge that they enjoy this status”. 3 Bittker &
Lokken, Federal Taxation of Income, Estates and Gifts, sec.
81.4.7 at 81-46 (2d ed. 1991 & Supp. No. 4 1996).11
b. Section 662(a)(2)(B) Not All-Inclusive
The distribution rules of sections 661 and 662, and the
exclusion for specific bequests provided by section 663(a)(1) do
not exclusively govern the section 102 differentiation between
nontaxable gifts and inheritances of property and taxable income
from property. Because sections 661-663, found in subpart C of
11 At the inception of the 1954 Code, the architects of
subchapter J recognized that the statutory framework of secs. 661
through 663 could result in misattributions of estate income
among estate beneficiaries. See Kamin, Surrey, & Warren
“The Internal Revenue Code of 1954: Trusts, Estates and
Beneficiaries”, 54 Colum. L. Rev. 1237, 1258-1259 (1954); see
also Fillman, “Selections from Subchapter J”, 10 Tax L. Rev. 453,
454-455 (1955). Not long after enactment of subchapter J,
statutory modifications were proposed in H.R. 9662, 86th Cong.,
2d Sess. (1960), incorporating recommendations of a report by the
Advisory Group on Subchapter J of the Internal Revenue Code of
1954, Final Report on Estates, Trusts, Beneficiaries, and
Decedents (Comm. Print 1958), which would, among other things,
have expanded the scope of the sec. 663(a)(1) exclusion of
specific bequests and applied the separate share rule of sec.
663(c) to estates. However, the bill was never enacted.
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