Ark. Code Ann. § 28-77-505: Reimbursement of principal from income

(a) If a fiduciary makes or expects to make a principal disbursement described in subsection (b), 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. (b) To the extent a fiduciary has not been and does not expect to be reimbursed by a third party, principal disbursements to which subsection (a) applies include: (1) an amount chargeable to income but paid from principal because income is not sufficient; (2) the cost of an improvement to principal, whether a change to an existing asset or the construction of a new asset, including a special assessment; (3) a disbursement made to prepare property for rental, including tenant allowances, leasehold improvements, and commissions; (4) a periodic payment on an obligation secured by a principal asset, to the extent the amount transferred from income to principal for depreciation is less than the periodic payment; and (5) a disbursement described in § 28-77-502(a) . (c) 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 (a). Added by Act 2021, No. 1088,§ 2, eff. 1/1/2022.

(a) If a fiduciary makes or expects to make a principal disbursement described in subsection (b), 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.

(b) To the extent a fiduciary has not been and does not expect to be reimbursed by a third party, principal disbursements to which subsection (a) applies include: (1) an amount chargeable to income but paid from principal because income is not sufficient; (2) the cost of an improvement to principal, whether a change to an existing asset or the construction of a new asset, including a special assessment; (3) a disbursement made to prepare property for rental, including tenant allowances, leasehold improvements, and commissions; (4) a periodic payment on an obligation secured by a principal asset, to the extent the amount transferred from income to principal for depreciation is less than the periodic payment; and (5) a disbursement described in § 28-77-502(a) .

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

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

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

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

(5) a disbursement described in § 28-77-502(a) .

(c) 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 (a).