Receipts from an entity
Sec. 23. (a) As used in this section, "entity" means a corporation,
partnership, limited liability company, regulated investment
company, real estate investment trust, common trust fund, or any
other organization in which a trustee has an interest. The term does
not include the following:
(1) A trust or an estate to which section 24 of this chapter
applies.
(2) A business or an activity to which section 25 of this chapter
applies.
(3) An asset backed security to which section 37 of this chapter
applies.
(b) Except as otherwise provided in this section, a trustee shall
allocate to income money received from an entity.
(c) A trustee shall allocate the following receipts from an entity
to principal:
(1) Property other than money.
(2) Money received in one (1) 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.
(4) Money received from an entity that is:
(A) a regulated investment company; or
(B) 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 and property received in a
distribution or series of related distributions is greater than
twenty percent (20%) of the entity's gross assets, as shown by
the entity's year-end financial statements immediately preceding
the initial receipt.
(e) Money is not received in partial liquidation, nor may 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
must 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:
(1) the entity's board of directors; or
(2) a 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.
As added by P.L.84-2002, SEC.2.
Last modified: May 27, 2006