ARTICLE 4



ALLOCATION
OF RECEIPTS DURING ADMINISTRATION OF TRUST



 



PART I. 
RECEIPTS FROM ENTITIES



 



[§557A-401]  Character of receipts. 
(a)  As used in this section, "entity" means a corporation,
partnership, joint venture, limited liability company, regulated investment
company, real estate investment trust, common trust fund, and any other
organization in which a trustee has an interest other than a trust or estate to
which section 557A-402 applies or a business or activity to which section
557A-403 applies, or an asset-backed security to which section 557A-415
applies.



(b)  Except as otherwise provided in this
section, money received by a trustee from an entity shall be allocated to
income.



(c)  Receipts from an entity that shall be
allocated to principal include:



(1)  Property other than money;



(2)  Money received in one distribution or a series of
related distributions in exchange for part or all of a trust's interest in the
entity;



(3)  Money received in total or partial liquidation of
the entity; and



(4)  Money received from an entity that is a regulated
investment company or a real estate investment trust if the money distributed
is a capital gain dividend for federal income tax purposes.



(d)  Money is received in partial liquidation:



(1)  To the extent that the entity, at or near the
time of a distribution, indicates that it is a distribution in partial
liquidation; or



(2)  If the total amount of money or property received
in a distribution or series of related distributions is greater than twenty per
cent of the entity's gross assets, as shown by the entity's year-end financial
statements immediately preceding the initial receipt.



(e)  Money shall not be received in partial
liquidation, nor shall it be taken into account under subsection (d)(2), to the
extent that it does not exceed the amount of income tax that a trustee or
beneficiary is required to pay on taxable income of the entity that distributes
the money.



(f)  A trustee may rely upon a statement made
by an entity about the source or character of a distribution if the statement
is made at or near the time of distribution by the entity's board of directors
or other person or group of persons authorized to exercise powers to pay money
or transfer property comparable to those of a corporation's board of directors.
[L 2000, c 191, pt of §1]