§ 685. Treatment of funeral trusts

640 words·~3 min read·/usc/title-26/section-685

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(a)In general In the case of a qualified funeral trust—

(1)subparts B, C, D, and E shall not apply, and

(2)no deduction shall be allowed by section 642(b).

(b)Qualified funeral trust For purposes of this subsection, the term “qualified funeral trust” means any trust (other than a foreign trust) if—

(1)the trust arises as a result of a contract with a person engaged in the trade or business of providing funeral or burial services or property necessary to provide such services,

(2)the sole purpose of the trust is to hold, invest, and reinvest funds in the trust and to use such funds solely to make payments for such services or property for the benefit of the beneficiaries of the trust,

(3)the only beneficiaries of such trust are individuals with respect to whom such services or property are to be provided at their death under contracts described in paragraph (1),

(4)the only contributions to the trust are contributions by or for the benefit of such beneficiaries,

(5)the trustee elects the application of this subsection, and

(6)the trust would (but for the election described in paragraph (5)) be treated as owned under subpart E by the purchasers of the contracts described in paragraph (1).

A trust shall not fail to be treated as meeting the requirement of paragraph

(6)by reason of the death of an individual but only during the 60-day period beginning on the date of such death.

(c)Application of rate schedule Section 1(e) shall be applied to each qualified funeral trust by treating each beneficiary’s interest in each such trust as a separate trust.

(d)Treatment of amounts refunded to purchaser on cancellation No gain or loss shall be recognized to a purchaser of a contract described in subsection (b)(1) by reason of any payment from such trust to such purchaser by reason of cancellation of such contract. If any payment referred to in the preceding sentence consists of property other than money, the basis of such property in the hands of such purchaser shall be the same as the trust’s basis in such property immediately before the payment.

(e)Simplified reporting The Secretary may prescribe rules for simplified reporting of all trusts having a single trustee and of trusts terminated during the year.

(Added Pub. L. 105–34, title XIII, § 1309(a), Aug. 5, 1997, 111 Stat. 1042; amended Pub. L. 105–206, title VI, § 6013(b), July 22, 1998, 112 Stat. 820; Pub. L. 110–317, § 9(a), (b), Aug. 29, 2008, 122 Stat. 3530.)

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Pub. L. 105–34, title XIII, § 1309(a)
111 Stat. 1042
Pub. L. 105–206, title VI, § 6013(b)
112 Stat. 820
Pub. L. 110–317, § 9(a)
122 Stat. 3530
Pub. L. 110–317
Pub. L. 105–206, § 6013(b)(1)
Pub. L. 105–206, § 6013(b)(2)
Pub. L. 110–317, § 9(c)
Pub. L. 105–206
Pub. L. 105–34
section 6024 of Pub. L. 105–206
Pub. L. 105–34, title XIII, § 1309(c)
111 Stat. 1043

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§ 685

Treatment of funeral trusts

U.S.C.×6

Stat.×3

U.S.C.§ 1

Pub. L.Pub. L. 105–34, title XIII, § 1309(a)

Stat.111 Stat. 1042

Pub. L.Pub. L. 105–206, title VI, § 6013(b)

Stat.112 Stat. 820

Pub. L.Pub. L. 110–317, § 9(a)

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