Asset backed securities
Sec. 37. (a) As used in this section, "asset backed security" means
an asset whose value is based upon the right it gives the owner to
receive distributions from the proceeds of financial assets that
provide collateral for the security. The term includes an asset that
gives the owner the right to receive from the collateral financial
assets only the interest or other current return or only the proceeds
other than interest or current return. The term does not include an
asset to which section 23 or section 31 of this chapter applies.
(b) If a trust receives a payment from interest or other current
return and from other proceeds of the collateral financial assets, the
trustee shall allocate to income the portion of the payment that the
payer identifies as being from interest or other current return and
shall allocate the balance of the payment to principal.
(c) If a trust receives one (1) or more payments in exchange for
the trust's entire interest in an asset backed security in one (1)
accounting period, the trustee shall allocate the payments to
principal. If a payment is one (1) of a series of payments that will
result in the liquidation of the trust's interest in the security over
more than one (1) accounting period, the trustee shall allocate ten
percent (10%) of the payment to income and the balance to principal.
As added by P.L.84-2002, SEC.2.
Last modified: May 27, 2006