(1) Interest determined using underpayment rates
The interest charge determined under this section with respect to any distribution is the amount of interest which would be determined on the partial tax computed under for the period described in paragraph (2) using the rates and the method under section 6621 applicable to underpayments of tax.
(2) Period
For purposes of paragraph (1), the period described in this paragraph is the period which begins on the date which is the applicable number of years before the date of the distribution and which ends on the date of the distribution.
(3) Applicable number of years
For purposes of paragraph (2)—
(A) In general
The applicable number of years with respect to a distribution is the number determined by dividing—
(i) the sum of the products described in subparagraph (B) with respect to each undistributed income year, by
(ii) the aggregate undistributed net income.
(B) Product described
For purposes of subparagraph (A), the product described in this subparagraph with respect to any undistributed income year is the product of—
(i) the undistributed net income for such year, and
(ii) the sum of the number of taxable years between such year and the taxable year of the distribution (counting in each case the undistributed income year but not counting the taxable year of the distribution).
(4) Undistributed income year
For purposes of this subsection, the term “undistributed income year” means any prior taxable year of the trust for which there is undistributed net income, other than a taxable year during all of which the beneficiary receiving the distribution was not a citizen or resident of the United States.
(5) Determination of undistributed net income
Notwithstanding section 666, for purposes of this subsection, an accumulation distribution from the trust shall be treated as reducing proportionately the undistributed net income for undistributed income years.
(6) Periods before 1996
Interest for the portion of the period described in paragraph (2) which occurs before
(A) by using an interest rate of 6 percent, and
(B) without compounding until
The total amount of the interest charge shall not, when added to the total partial tax computed under , exceed the amount of the accumulation distribution (other than the amount of tax deemed distributed by or (c)) in respect of which such partial tax was determined.
The interest charge determined under this section shall not be allowed as a deduction for purposes of any tax imposed by this title.