22-3-415 - Receipts normally apportioned -- Asset-backed securities.
22-3-415. Receipts normally apportioned -- Asset-backed securities.
(1) In this section, "asset-backed security" means an asset whose value is based upon theright it gives the owner to receive distributions from the proceeds of financial assets that providecollateral for the security. The term includes an asset that gives the owner the right to receivefrom the collateral financial assets only the interest or other current return or only the proceedsother than interest or current return. The term does not include an asset to which Section22-3-401 or 22-3-409 applies.
(2) If a trust receives a payment from interest or other current return and from otherproceeds of the collateral financial assets, the trustee shall allocate to income the portion of thepayment which the payer identifies as being from interest or other current return and shallallocate the balance of the payment to principal.
(3) If a trust receives one or more payments in exchange for the trust's entire interest inan asset-backed security in one accounting period, the trustee shall allocate the payments toprincipal. If a payment is one of a series of payments that will result in the liquidation of thetrust's interest in the security over more than one accounting period, the trustee shall allocate10% of the payment to income and the balance to principal.
Enacted by Chapter 285, 2004 General Session