75A-5-505. Reimbursement of principal from income.

226 words·~1 min read·/ut/title-75a/chapter-5/75a-5-505

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

Effective 9/1/2024

(1)If a fiduciary makes or expects to make a principal disbursement described in Subsection (2), the fiduciary may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or provide a reserve for future principal disbursements.

(2)To the extent that a fiduciary has not been and does not expect to be reimbursed by a third party, principal disbursements to which Subsection

(1)applies include:

(a)an amount chargeable to income but paid from principal because income is not sufficient;

(b)the cost of an improvement to principal, regardless of whether the improvement is a change to an existing asset or the construction of a new asset, including a special assessment;

(c)a disbursement made to prepare property for rental, including tenant allowances, leasehold improvements, and commissions;

(d)a periodic payment on an obligation secured by a principal asset, to the extent that the amount transferred from income to principal for depreciation is less than the periodic payment; and

(e)a disbursement described in Subsection 75A-5-502 (1).

(3)If an asset whose ownership gives rise to a principal disbursement becomes subject to a successive interest after an income interest ends, the fiduciary may continue to make transfers under Subsection (1).

Renumbered and Amended by Chapter 364 , 2024 General Session