2006 New York Code - Character Of Receipts

 
  § 11-A-4.1 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 11-A-4.2
  applies, a business  or  activity  to  which  11-A-4.3  applies,  or  an
  asset-backed security to which 11-A-4.15 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; provided that if a trustee receives the
  option  to  receive  a distribution in the form of money or property and
  elects to  receive  the  distribution  in  the  form  of  property  such
  distribution shall be considered to be a distribution of 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
  percent  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 subparagraph (d)(2), 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.