REPEAL OF THROWBACK RULES APPLICABLE TO CERTAIN DOMESTIC TRUSTS.

SEC. 507. REPEAL OF THROWBACK RULES APPLICABLE TO CERTAIN DOMESTIC TRUSTS. (a) Accumulation Distributions.— (1) In general.—Section 665 is amended by inserting after subsection (b) the following new subsection: “(c) Exception for Accumulation Distributions From Certain Domestic Trusts.—For purposes of this subpart— “(1) In general.—In the case of a qualified trust, any distribution in any taxable year beginning after the date of the enactment of this subsection shall be computed without regard to any undistributed net income. “(2) Qualified trust.—For purposes of this subsection, the term ‘qualified trust’ means any trust other than— “(A) a foreign trust (or, except as provided in regulations, a domestic trust which at any time was a foreign trust), or “(B) a trust created before March 1, 1984, unless it is established that the trust would not be aggregated with other trusts under section 643(f) if such section applied to such trust.”. (2) Conforming amendments.—Subsection (b) of section 665 is amended by inserting “except as provided in subsection (c),” after “subpart”. (b) Repeal of Tax on Transfers to Trusts at Less Than Fair Market Value.—111 STAT. 857 (1) Subpart A of part I of subchapter J of chapter 1 is amended by striking section 644 and by redesignating section 645 as section 644. (2) Paragraph (5) of section 706(b) is amended by striking “section 645” and inserting “section 644”. (3) The table of sections for such subpart is amended by striking the last 2 items and inserting the following new item: “Sec. 644. Taxable year of trusts.”. (c) Effective Dates.— (1) Accumulation distributions.—The amendments made by subsection (a) shall apply to distributions in taxable years beginning after the date of the enactment of this Act. (2) Transferred property.—The amendments made by subsection (b) shall apply to sales or exchanges after the date of the enactment of this Act.