KRS 386.466: "Entity" defined -- Character of receipts from entities.

(1) In this section, "entity" means a corporation, partnership, limited partnership,

limited liability company, statutory or business trust, regulated investment

company, real estate investment trust, common trust fund, or any other organization

in which a tru stee has an interest other than a trust or estate to which KRS 386.468

applies.

(2) Except as otherwise provided in this section, a trustee shall allocate to income

money received from an entity.

(3) A trustee shall allocate the following receipts from an entity to principal:

(a) Property other than money;

(b) Money received in one (1) distribution or a series of related distributions in

exchange for part or all of a trust's interest in the entity;

(c) Money received in total or partial liquidation of the entity; and

(d) 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.

(4) Money is received in partial liquidation:

(a) To the extent that the entity, at or near the time of a distribution, indicates that

it is a distribution in partial liquidation; or

(b) If the total amount of money and property received in a distribution or series

of related distributions is greater than t wenty percent (20%) of the entity's

gross assets, as shown by the entity's year end financial statements

immediately preceding the initial receipt.

(5) Money is not received in partial liquidation, nor may it be taken into account under

paragraph (b) of su bsection (4) of this section to the extent that it does not exceed

the amount of income tax that a trustee or beneficiary shall pay on taxable income

of the entity that distributes the money.

(6) 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 thos e of a corporation's

board of directors.