22-3-504 - Transfers from income to reimburse principal.
22-3-504. Transfers from income to reimburse principal.
(1) If a trustee makes or expects to make a principal disbursement described in thissection, the trustee may transfer an appropriate amount from income to principal in one or moreaccounting periods to reimburse principal or to provide a reserve for future principaldisbursements.
(2) Principal disbursements to which Subsection (1) applies include the following, butonly to the extent that the trustee has not been and does not expect to be reimbursed by a thirdparty:
(a) an amount chargeable to income but paid from principal because it is unusually large,including extraordinary repairs;
(b) a capital improvement to a principal asset, whether in the form of changes to anexisting asset or the construction of a new asset, including special assessments;
(c) disbursements made to prepare property for rental, including tenant allowances,leasehold improvements, and broker's commissions;
(d) periodic payments on an obligation secured by a principal asset to the extent that theamount transferred from income to principal for depreciation is less than the periodic payments;and
(e) disbursements described in Subsection 22-3-502(1)(g).
(3) If the asset whose ownership gives rise to the disbursements becomes subject to asuccessive income interest after an income interest ends, a trustee may continue to transferamounts from income to principal as provided in Subsection (1).
Enacted by Chapter 285, 2004 General Session