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Introduction

SECTION 3. ELIGIBILITY FOR

Internal Revenue Bulletin 2006-12 · 2026-10-03 edition · updated 2026-10-04 · United States

THE NMWHFIT SAFE HARBOR AND SIMPLIFIED REPORTING FOR EQUITY TRUSTS UPON THE SALE OF A TRUST INTEREST

Section 1.671–5(f)(1)(i) provides that if substantially all of a NMWHFIT’s income is from dividends (as defined in § 6042(b) and the regulations thereunder) or interest (as defined in § 6049(b) and the regulations thereunder) and all trust interests have identical value and rights, a NMWHFIT may report under the safe harbor in § 1.671–5(f). Section 1.671–5(c)(2)(v)(C) provides that a NMWHFIT is eligible for simplified reporting on the sale of a trust interest by a trust interest holder if substantially all of the income of the NMWHFIT consists of dividends and: (1) the trustee is required by the governing document of the NMWHFIT to make distributions of all cash (less reasonably required reserve funds) held by the NMWHFIT no less frequently than monthly; or (2) the qualified NMWHFIT exception is satisfied.

Commentators have requested clarification regarding whether trust sales

March 20, 2006 644 2006–12 I.R.B.

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▸Contents — Internal Revenue Bulletin 2006-12
Internal Revenue Bulletin 2006-12

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