14-7428. Transfers from income to reimburse
principal
A. If a trustee makes or expects to make a principal disbursement described in this
section, the trustee may transfer an appropriate amount from income to principal in one
or more accounting periods to reimburse principal or to provide a reserve for future
principal disbursements.
B. Principal disbursements to which subsection A of this section applies include
the following, but only to the extent that the trustee has not been and does not expect
to be reimbursed by a third party:
1. An amount chargeable to income but paid from principal because it is unusually
large, including extraordinary repairs.
2. A capital improvement to a principal asset, whether in the form of changes to an
existing asset or the construction of a new asset, including special assessments.
3. Disbursements made to prepare property for rental, including tenant allowances,
leasehold improvements and brokers' commissions.
4. Periodic payments on an obligation secured by a principal asset to the extent
that the amount transferred from income to principal for depreciation is less than the
periodic payments.
5. Disbursements described in section 14-7426, subsection A, paragraph 7.
C. If the asset whose ownership gives rise to the disbursements becomes subject to
a successive income interest after an income interest ends, a trustee may continue to
transfer amounts from income to principal as provided in subsection A of this section.
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