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District of Columbia Official Code 2001 Edition. |
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Division V. Local Business Affairs. |
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Title 28. Commercial Instruments and Transactions. |
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Subtitle II. Other Commercial Transactions. |
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Chapter 48. Principal and Income; Uniform Law. |
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Subchapter IV. Allocation of Receipts During Administration of Trust. |
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Part A. Receipts from Entities.
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(a) For the purposes of this section, the term "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 other than a trust or estate to which § 28-4804.02 applies, a business or activity to which § 28-4804.03 applies, or an asset-backed security to which § 28-4804.15 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 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 and property received in a distribution or series of related distributions is greater than 20 percent 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) of this section, 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 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.
(Apr. 27, 2001, D.C. Law 13-292, § 502(c), 48 DCR 2087.)
HISTORICAL AND STATUTORY NOTES
Legislative History of Laws
For Law 13-292, see notes following § 28-4801.01.
Uniform Law
This section is based upon § 401 of the Uniform Principal and Income Act (1997 Act). See 7B Uniform Laws Annotated, Master Edition, or ULA Database on Westlaw.
A trustee shall allocate to income an amount received as a distribution of income from a trust or an estate in which the trust has an interest other than a purchased interest, and shall allocate to principal an amount received as a distribution of principal from such a trust or estate. If a trustee purchases an interest in a trust that is an investment entity, or a decedent or donor transfers an interest in such a trust to a trustee, § 28-4804.01 or § 28- 4804.15 applies to a receipt from the trust.
(Apr. 27, 2001, D.C. Law 13-292, § 502(c), 48 DCR 2087.)
HISTORICAL AND STATUTORY NOTES
Legislative History of Laws
For Law 13-292, see notes following § 28-4801.01.
Uniform Law
This section is based upon § 402 of the Uniform Principal and Income Act (1997 Act). See 7B Uniform Laws Annotated, Master Edition, or ULA Database on Westlaw.
(a) If a trustee who conducts a business or other activity determines that it is in the best interest of all the beneficiaries to account separately for the business or activity instead of accounting for it as part of the trust's general accounting records, the trustee may maintain separate accounting records for its transactions, whether or not its assets are segregated from other trust assets.
(b) A trustee who accounts separately for a business or other activity may determine the extent to which its net cash receipts must be retained for working capital, the acquisition or replacement of fixed assets, and other reasonably foreseeable needs of the business or activity, and the extent to which the remaining net cash receipts are accounted for as principal or income in the trust's general accounting records. If a trustee sells assets of the business or other activity, other than in the ordinary course of the business or activity, the trustee shall account for the net amount received as principal in the trust's general accounting records to the extent the trustee determines that the amount received is no longer required in the conduct of the business.
(c) Activities for which a trustee may maintain separate accounting records include:
(1) Retail, manufacturing, service, and other traditional business activities;
(2) Farming;
(3) Raising and selling livestock and other animals;
(4) Management of rental properties;
(5) Extraction of minerals and other natural resources;
(6) Timber operations; and
(7) Activities to which § 28-4804.14 applies.
(Apr. 27, 2001, D.C. Law 13-292, § 502(c), 48 DCR 2087.)
HISTORICAL AND STATUTORY NOTES
Legislative History of Laws
For Law 13-292, see notes following § 28-4801.01.
Uniform Law
This section is based upon § 403 of the Uniform Principal and Income Act (1997 Act). See 7B Uniform Laws Annotated, Master Edition, or ULA Database on Westlaw.
