§ 668. Interest charge on accumulation distributions from foreign trusts
(a)
General rule
(1)
Interest determined using underpayment rates
The interest charge determined under this section with respect to any distribution is the amount of interest which would be determined on the partial tax computed under section
667
(b) for the period described in paragraph (2) using the rates and the method under section
6621 applicable to underpayments of tax.
(2)
Period
For purposes of paragraph (1), the period described in this paragraph is the period which begins on the date which is the applicable number of years before the date of the distribution and which ends on the date of the distribution.
(3)
Applicable number of years
For purposes of paragraph (2)—
(A)
In general
The applicable number of years with respect to a distribution is the number determined by dividing—
(i)
the sum of the products described in subparagraph (B) with respect to each undistributed income year, by
The quotient determined under the preceding sentence shall be rounded under procedures prescribed by the Secretary.
(4)
Undistributed income year
For purposes of this subsection, the term “undistributed income year” means any prior taxable year of the trust for which there is undistributed net income, other than a taxable year during all of which the beneficiary receiving the distribution was not a citizen or resident of the United States.
(5)
Determination of undistributed net income
Notwithstanding section
666, for purposes of this subsection, an accumulation distribution from the trust shall be treated as reducing proportionately the undistributed net income for undistributed income years.
(c)
Interest charge not deductible
The interest charge determined under this section shall not be allowed as a deduction for purposes of any tax imposed by this title.