Where it is specified in this subpart that the grantor or another person shall be treated as the owner of any portion of a trust, there shall then be included in computing the taxable income and credits of the grantor or the other person those items of income, deductions, and credits against tax of the trust which are attributable to that portion of the trust to the extent that such items would be taken into account under this chapter in computing taxable income or credits against the tax of an individual. Any remaining portion of the trust shall be subject to subparts A through D. No items of a trust shall be included in computing the taxable income and credits of the grantor or of any other person solely on the grounds of his dominion and control over the trust under section 61 (relating to definition of gross income) or any other provision of this title, except as specified in this subpart.
26 U.S. Code § 671. Trust income, deductions, and credits attributable to grantors and others as substantial owners
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(Aug. 16, 1954, ch. 736, 68A Stat. 226.)
Certain Entities Not Treated as Corporations
“(b)Entity.—An entity is described in this subsection if—
“(1)In general.—An election under this subsection to have the provisions of this section apply—
shall be made by the board of trustees of the entity before January 1, 1991, and
shall not be valid unless accompanied by an agreement described in paragraph (2).
“(B)Permissible acquisitions.—Property is described in this paragraph if it is—
“(i) surface rights to property the acquisition of which—
is necessary to mine mineral rights held on October 22, 1986, and
“(ii) surface rights to property which are not described in clause (i) and which—
are necessary to mine mineral rights held on October 22, 1986,
part of any required reserves of the entity.
“(3)Beginning of period for which is in effect.—
“(d)Special Rules for Taxation of .—
“(1)Election treated as a liquidation.—If an election is made under subsection (c) with respect to any entity—
“(B) for purposes of section 333 of such Code (as so in effect)—
“(2)Termination of election.—
If an entity ceases to be described in subsection (b) or violates any term of the agreement described in subsection (c)(2), the entity shall, for purposes of the Internal Revenue Code of 1986, be treated as a corporation for the taxable year in which such cessation or violation occurs and for all subsequent taxable years.
“(e)Special Rule for Holding Interests.—In applying subpart E of part I of subchapter J of chapter 1 of the Internal Revenue Code of 1986 to any entity to which this section applies—
a reversionary interest shall not be taken into account until it comes into possession, and