[§557A-504]  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) 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 broker's
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; and



(5)  Disbursements described in section
557A-502(a)(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). [L 2000, c 191, pt of §1]