N.Y. Estates, Powers & Trusts Law § 11-a-4.1: Character of receipts

§ 11-A-4.1 Character of receipts

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

limited liability company, regulated investment company, real estate

investment trust, common trust fund, or any other organization in which

a trustee has an interest other than a trust or estate to which 11-A-4.2

applies, a business or activity to which 11-A-4.3 applies, or an

asset-backed security to which 11-A-4.15 applies.

(b) Except as otherwise provided in this section, a trustee shall

allocate to income money received from an entity.

(c) A trustee shall allocate the following receipts from an entity to

principal:

(1) property other than money; provided that if a trustee receives the

option to receive a distribution in the form of money or property and

elects to receive the distribution in the form of property such

distribution shall be considered to be a distribution of money;

(2) money received in one distribution or a series of related

distributions in exchange 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 a real estate investment trust if the money distributed is a

capital gain dividend 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 or series of related distributions is greater than twenty

percent of the entity's gross assets, as shown by the entity's year-end

financial statements immediately preceding the initial receipt.

(e) Money is not received in partial liquidation, nor may it be taken

into account under subparagraph (d)(2), to the extent that it does not

exceed the amount of income tax that a trustee or beneficiary must pay

on taxable income of the entity that distributes the money.

(f) 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 those of a corporation's board

of directors.