1. In the taxation of trusts, a rule requiring that an amount distributed in any tax year that exceeds the year’s distributable net income must be treated as if it had been distributed in the preceding year. • The beneficiary is taxed in the current year although the computation is made as if the excess had been distributed in the previous year. If the trust did not have undistributed accumulated income in the preceding year, the amount of the throwback is tested against each of the preceding years. IRC (26 USCA) §§ 665–668. [Cases: Internal Revenue 4019. C.J.S. Internal Revenue §§ 450–452.]
2. A taxation rule requiring a sale that would otherwise be exempt from state income tax (because the state to which the sale would be assigned for apportionment purposes does not have an income tax, even though the seller’s state does) to be attributed to the seller’s state and thus subjected to a state-level tax. • This rule applies only if the seller’s state has adopted a throwback rule.
