Sec. 45a-542i. Character of receipts.
Sec. 45a-542i. 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 section 45a-542j applies, a business or
activity to which section 45a-542k applies, or an asset-backed security to which section
45a-542w 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;
(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 per cent 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 subdivision (2) of subsection (d) of this section, 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; provided, however, that no such statement shall override the provisions of
subdivision (2) of subsection (d) of this section and subsection (e) of this section.
(P.A. 99-164, S. 10, 36.)
History: P.A. 99-164 effective January 1, 2000.