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The IRS has ruled, in PLR 200334030, that neither a testamentary trust (Trust) nor its beneficiaries will realize gain or loss for federal income tax purposes as a result of non-pro rata distributions made in kind by the trustees to its beneficiaries under the plan of termination. In this ruling, the IRS stated that Rev. Rul. 69-486, 1969-2 C.B. 159, which deals with the consequences of a non-pro rata distribution of trust property made in kind by a trustee, holds that where a trustee is not authorized to make a non-pro rata distribution, the distribution is equivalent to a pro rata distribution followed by an exchange between the beneficiaries that is subject to taxation under the provisions of [sec][sec]1001 and 1002. The IRS concluded, in PLR 200334030, that, while the terms of Decedent's will allowed for partitioning of the Trust at the Trust's termination, there was no express language prohibiting or allowing non-pro rata distributions. However, the IRS determined that, unlike the factual pattern in Rev. Rul. 69-486, non-pro rata distributions from the Trust were permitted in accordance with Statute 1 of the controlling state law and, therefore, that the transaction would not be equivalent to a pro rata distribution followed by an exchange between the beneficiaries under federal income tax law. Consequently, the plan of distribution would not cause the Trust or its beneficiaries to realize gain or loss.