55-277.10 - Character of receipts. - Virginia Statutes

§ 55-277.10. Character of receipts.

A. In this section, "entity" means a corporation, partnership, limitedliability company, regulated investment company, real estate investmenttrust, common trust fund, or any other organization in which a trustee has aninterest other than a trust or estate to which § 55-277.11 applies, abusiness or activity to which § 55-277.12 applies, or an asset-backedsecurity to which § 55-277.24 applies.

B. Except as otherwise provided in this section, a trustee shall allocate toincome money received from an entity.

C. A trustee shall allocate the following receipts from an entity toprincipal:

1. Property other than money;

2. Money received in one distribution or a series of related distributions inexchange 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 areal estate investment trust if the money distributed is a capital gaindividend 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 orseries of related distributions is greater than twenty percent of theentity's gross assets, as shown by the entity's year-end financial statementsimmediately preceding the initial receipt.

E. Money is not received in partial liquidation, nor may it be taken intoaccount under subdivision D 2, to the extent that it does not exceed theamount of income tax that a trustee or beneficiary must pay on taxable incomeof the entity that distributes the money.

F. A trustee may rely upon a statement made by an entity about the source orcharacter of a distribution if the statement is made at or near the time ofdistribution by the entity's board of directors or other person or group ofpersons authorized to exercise powers to pay money or transfer propertycomparable to those of a corporation's board of directors.

(1999, c. 975.)