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(a) Taxable termination.--
(1) General rule.--For purposes of this chapter, the term “taxable termination” means the termination (by death, lapse of time, release of power, or otherwise) of an interest in property held in a trust unless--
(A) immediately after such termination, a non-skip person has an interest in such property, or
(B) at no time after such termination may a distribution (including distributions on termination) be made from such trust to a skip person.
(2) Certain partial terminations treated as taxable.--If, upon the termination of an interest in property held in trust by reason of the death of a lineal descendant of the transferor, a specified portion of the trust's assets are distributed to 1 or more skip persons (or 1 or more trusts for the exclusive benefit of such persons), such termination shall constitute a taxable termination with respect to such portion of the trust property.
(b) Taxable distribution.--For purposes of this chapter, the term “taxable distribution” means any distribution from a trust to a skip person (other than a taxable termination or a direct skip).
(c) Direct skip.--For purposes of this chapter--
(1) In general.--The term “direct skip” means a transfer subject to a tax imposed by chapter 11 or 12 of an interest in property to a skip person.
(2) Look-thru rules not to apply.--Solely for purposes of determining whether any transfer to a trust is a direct skip, the rules of section 2651(f)(2) shall not apply.
Cite this article: FindLaw.com - 26 U.S.C. § 2612 - U.S. Code - Unannotated Title 26. Internal Revenue Code § 2612. Taxable termination; taxable distribution; direct skip - last updated January 01, 2018 | https://codes.findlaw.com/us/title-26-internal-revenue-code/26-usc-sect-2612.html
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