58-9-401. Character of receipts.
58-9-401
58-9-401. Character of receipts.(a) As used in this section, "entity" means a corporation,partnership,limitedliability company, regulated investment company, real estate investment trust,common trust fund, or any other organization in which a trustee has an interestother than a trust or estate to which K.S.A. 58-9-402, andamendments thereto,applies, a business oractivity towhich K.S.A. 58-9-403, and amendments thereto, applies, or anasset-backedsecurityto which K.S.A. 58-9-415, and amendments thereto,applies.
(b) Except as otherwise provided in this section, a trustee shall allocatetoincome money received from an entity.
(c) A trustee shall allocate the following receipts from an entity toprincipal:
(1) Property other than money;
(2) money received in one distribution or a series of related distributionsin 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 investmentcompany or a real estate investment trust if the money distributed is a capitalgaindividend 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 distributionor series of related distributions is greater than 20 percent of theentity's grossassets, as shown by the entity’s year-end financial statementsimmediatelypreceding the initial receipt.
(e) Money is not received in partial liquidation, nor may it be taken intoaccount under subsection (d)(2), to the extent that it does not exceed theamount ofincome tax that a trustee or beneficiary must pay on taxable income of theentitythat distributes the money.
(f) A trustee may rely upon a statement made by an entity about the sourceor character of a distribution if the statement is made at or near the time ofdistribution by the entity's board of directors or other person or groupof personsauthorized to exercise powers to pay money or transfer property comparable tothose of a corporation's board of directors.
History: L. 2000, ch. 61, § 10; July 1.