26 U.S.C. § 671: Trust income, deductions, and credits attributable to grantors and others as substantial owners

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. For purposes of the Internal Revenue Code of 1986, if the entity described in subsection (b) makes an election under subsection (c), such entity shall be treated as a trust to which subpart E of part 1 of subchapter J of chapter 1 of such Code applies. such entity was created in 1906 as a common law trust and is governed by the trust laws of the State of Minnesota, such entity is exclusively engaged in the leasing of mineral property and activities incidental thereto, and income interests in such entity are publicly traded as of October 22, 1986 , on a national stock exchange. 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). The agreement described in this paragraph is a written agreement signed by the board of trustees of the entity which provides that the entity will not acquire any additional property other than property described in subparagraph (B). is necessary to mine mineral rights held on October 22, 1986 , and is required by a written binding agreement between the entity and an unrelated person entered into on or before October 22, 1986 , are acquired in an exchange to which section 1031 [probably means section 1031 of this title ] applies, and are necessary to mine mineral rights held on October 22, 1986 , tangible personal property incidental to the leasing of mineral property and activities incidental thereto, or part of any required reserves of the entity. The period during which an election is in effect under this subsection shall begin on the 1st day of the 1st taxable year beginning after the date of the enactment of this Act [ Oct. 22, 1986 ] and following the taxable year in which the election is made. Any election under this subsection shall be made in such manner as the Secretary of the Treasury or his delegate may prescribe. such entity shall be treated as having been liquidated into a trust immediately before the period described in subsection (c)(3) in a liquidation to which section 333 of the Internal Revenue Code of 1954 (as in effect before the amendments made by this Act) applies, and any person holding an income interest in such entity as of such time shall be treated as a qualified electing shareholder, and the earnings and profits, and the value of money or stock or securities, of such entity shall be apportioned ratably among persons described in clause (i). 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. Paragraph (2) shall not apply if the trust ceases to be described in subsection (b) or violates the agreement in subsection (c)(2) because the trust ceases to exist. a reversionary interest shall not be taken into account until it comes into possession, and all items of income, gain, loss, deduction, and credit shall be allocated to persons holding income interests for the period of the allocation.”