§ 37A-5-504. Transfers from income to reimburse principal. - North Carolina Statutes

§ 37A‑5‑504. Transfers from income to reimburse principal.

(a)        If a trustee makesor expects to make a principal disbursement described in this section, thetrustee may transfer an appropriate amount from income to principal in one ormore accounting periods to reimburse principal or to provide a reserve forfuture principal disbursements.

(b)        Principaldisbursements to which subsection (a) of this section applies include thefollowing, but only to the extent that the trustee has not been and does notexpect to be reimbursed by a third party:

(1)        An amount chargeableto income but paid from principal because it is unusually large, includingextraordinary repairs;

(2)        A capitalimprovement to a principal asset, whether in the form of changes to an existingasset or the construction of a new asset, including special assessments;

(3)        Disbursements madeto prepare property for rental, including tenant allowances, leaseholdimprovements, and broker's commissions;

(4)        Periodic payments onan obligation secured by a principal asset to the extent that the amounttransferred from income to principal for depreciation is less than the periodicpayments; and

(5)        Disbursementsdescribed in G.S. 37A‑5‑502(a)(7).

(c)        If the asset whoseownership gives rise to the disbursements becomes subject to a successiveincome interest after an income interest ends, a trustee may continue totransfer amounts from income to principal as provided in subsection (a) of thissection. (2003‑232,s. 2.)