2020 Louisiana Laws
Revised Statutes
Title 9 - Civil Code-Ancillaries
§2149. Corporate distributions

RS 2149 - Corporate distributions

A. Corporate distributions of shares of the distributing corporation, including distributions in the form of a stock split or stock dividend, are principal. A right to subscribe to shares or other securities issued by the distributing corporation accruing to stockholders on account of their stock ownership and the proceeds of any sale of the right are principal.

B. Except to the extent that the corporation indicates that some part of a corporate distribution is a settlement of preferred or guaranteed dividends accrued since the trustee became a stockholder or is in lieu of an ordinary cash dividend, a corporate distribution is principal if the distribution is pursuant to:

(1) A call of shares;

(2) A merger, consolidation, reorganization, or other plan by which assets of the corporation are acquired by another corporation; or

(3) A total or partial liquidation of the corporation, including any distribution that the corporation indicates is a distribution in total or partial liquidation, or any distribution of assets, other than cash, pursuant to a court decree or final administrative order by a government agency ordering distribution of the particular assets.

C. Distributions made from ordinary income by a regulated investment company or by a trust qualifying and electing to be taxed under federal law as a real estate investment trust are income. All other distributions made by the company or trust, including distributions from capital gains, depreciation, or depletion, whether in the form of cash or an option to take new stock or cash or an option to purchase additional shares, are principal.

D. All other corporate distributions are income, including cash dividends, distributions of, or rights to subscribe to, shares, securities, or obligations of corporations other than the distributing corporation, and the proceeds of the rights or of the property distributions, except as Sub-sections A, B, or C above provide otherwise.

E. If the distributing corporation gives a stockholder an option to receive a distribution either in cash or in its own shares, the distribution chosen is income, except as provided in Sub-sections B and C of this section.

F. A trustee may rely upon any statement of the distributing corporation as to any fact relevant under any provision of this Sub-part concerning the source or character of dividends or distributions of corporate assets.

NOTE: §2149 as amended by Acts 2020, No. 17, eff. Jan. 1, 2021.

RS 2149 - Receipts from interests in juridical persons

A. Except as otherwise provided in this Section, a trustee shall allocate to income money received on account of an interest in a juridical person.

B. A trustee shall allocate to principal the following distributions received on account of a trustee's interest in a juridical person:

(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 trustee's interest in the juridical person.

(3) Money received in total or partial liquidation of the juridical person.

(4) Money received from a regulated investment company or a real estate investment trust if the money distributed is a capital gain dividend for federal income tax purposes.

C. Money is received in partial liquidation to the extent that the juridical person, at or near the time of a distribution, indicates that it is a distribution in partial liquidation. A partial liquidation also occurs if the total amount of money and property received in a distribution or series of related distributions is greater than twenty percent of the juridical person's gross assets, as shown by the juridical person's year-end financial statements immediately preceding the initial receipt.

D. Money is not received in partial liquidation, nor may it be taken into account under Subsection C 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 juridical person that distributes the money.

E. Notwithstanding the provisions of this Section, if the receipt is one to which a more specific provision of this Subpart applies, a trustee may allocate the receipt based upon the source or character of the receipt and may rely upon a statement made by the juridical person regarding the source or character of the receipt.

Acts 2020, No. 17, §1, eff. Jan. 1, 2021.