¹NPRM REG-106513-00 (2/15/01).

²See Uniform Law Commissioners, Introduction & Adoption of Uniform Acts, available at www.nccusl. org/uniformact_factsheets/uniformacts-fs-upia.htm (last modified in 2001; provides the status of (1) all current uniform laws adopted by the states and (2) new uniform law drafting projects).

³See IR-2001-40 (3/30/01).

⁴See NY EPTL-SCPA Legislative Advisory Comm., Fifth Report (4/7/98)(hereinafter cited as "EPTL Report") and Supplement to Fifth Report of the EPTL-SCPA Legislative Advisory Committee (5/26/00)(hereinafter cited as "EPTL Supplement") (recommending that the New York State Legislature enact additions to Estates, Powers, and Trusts Law Article 11, Part 2, to change the definition of trust accounting income).

⁵See Spalding, "Put Your Trust in Trustees," 186 J. of Accountancy 69 (November 1998)(compiling a list of states and comparing which versions (if any) of the Uniform Principal and Income Acts and the Uniform Prudent Investor Act they have adopted).

⁶See Restatement (Third) of Trusts: Prudent Investor Rule, 227-229 (1992).

⁷See Cal. Prob. Code 16,336.

⁸N.Y. Estates, Powers, and Trusts Law 11-2.4 (6/19/01).

⁹See Rosepink, "The Total Return Trust—Where And How To Tax Capital Gains," 137 Trusts & Ests. 12 (October 1998) (analyzing current uncertainties on the taxation of capital gains distributed under a unitrust standard of income).

¹⁰IRS Letter Ruling 8728001 (11/21/86).

¹¹Rev. Rul. 68-392, 1968-2 CB 284.

¹²See Rosepink, note 9 supra.

Fifteen states have already adopted versions of the UPIA.

¹³See Kasner, "Capital Gains: A New Definition for Income and Principal?," Tax Notes Today (3/5/01)(commenting on the drafting implications of the Sec. 643 proposed regulations).

¹⁴Id.

¹⁵AICPA, "Proposed Regulations Under IRC Section 643 Regarding the Definition of Income," Tax Notes Today (5/18/01).

¹⁶In Examples 1 and 2, DNI is presumed to exclude capital gains; capital gains are added back to illustrate the proposed regulations' effect.

¹⁷"Required distributions" are assumed to be those required under the terms of the governing instrument before the trustee exercises discretion to allocate additional amounts to income.

¹⁸See note 16, supra.

¹⁹See note 17, supra.

²⁰See note 15, supra.

²¹Id.

Estates,Trusts&Gifts

The new rules will raise the bar of responsibility for all trust professionals, including CPAs, attorneys and trustees.

²²Annual Winter Estate Planning Practice Update (American Law Network Live Nationwide via Satellite)(2/15/01)(live comments of Beth S. Kaufman, Jeffrey N. Pennell, Lawrence P. Katzenstein, Pam Schneider and Malcolm A. Moore during open panel discussion on Sec. 643 proposed regulations).

²³Telephone interview with Brad Poston, IRS Attorney, Sec. 643 Project Coordinator (4/18/01) (explaining the reasons for the IRS early start on the Sec. 643 regulatory project).

²⁴See note 8, supra.

²⁵See Wolf, "Bob Wolf's Commentary on Proposed Regs.," Steve Leimberg's Newsletter (2/26/01).

²⁶Regs. Sec. 1.664-3(a)(1)(i)(b) (as amended by TD 8791, 12/9/98).

²⁷See EPTL Report, note 4 supra.

²⁸Rev. Proc. 90-31, 1990-1 CB 539.

²⁹Notice 2000-37, IRB 2000-29, 118.

³⁰See AICPA, note 15 supra.

³¹See Schultz, "Unitrust Capital Gain Discretion Prohibited in Proposed Regulations," Pepperdine University Center for Estate and Gift Tax Planning Gift Law e-Newsletter (2/19/01), available at www.pepperdine.edu/estateandgift/PEPNET.htm (noting the adverse effect on charitable remainder trusts).

³²TD 8912 (12/20/00, corrected 2/21/01).

³³See AICPA, note 15 supra.