Arizona Laws 14-7410. Character of receipts; definition
A. Except as otherwise provided in this section, a trustee shall allocate to income money received from an entity.
Terms Used In Arizona Laws 14-7410
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Estate: includes the property of the decedent, trust or other person whose affairs are subject to this title as originally constituted and as it exists from time to time during administration. See Arizona Laws 14-1201
- Income: means money or property that a fiduciary receives as current return from a principal asset and includes a portion of receipts from a sale, exchange or liquidation of a principal asset, to the extent provided in sections 14-7410 through 14-7424. See Arizona Laws 14-7401
- Organization: means a corporation, limited liability company, business trust, estate, trust, partnership, joint venture, association, government or governmental subdivision or agency or any other legal or commercial entity. See Arizona Laws 14-1201
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- Person: means any individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision, agency or instrumentality, public corporation or other legal or commercial entity. See Arizona Laws 14-7401
- Principal: means property held in trust for distribution to a remainder beneficiary when the trust terminates. See Arizona Laws 14-7401
- Property: includes both real and personal property. See Arizona Laws 1-215
- Security: includes any note, stock, treasury stock, bond, debenture, evidence of indebtedness, certificate of interest or participation in an oil, gas or mining title or lease or in payments out of production under that title or lease, collateral trust certificate, transferable share or voting trust certificate and, in general, includes any interest or instrument commonly known as a security, or any certificate of interest or participation, any temporary or interim certificate, receipt or certificate of deposit for, or any warrant or right to subscribe to or purchase, any of these securities. See Arizona Laws 14-1201
- Trust: includes an express trust, private or charitable, with any additions, wherever and however created. See Arizona Laws 14-1201
- Trustee: A person or institution holding and administering property in trust.
- Trustee: includes an original, additional or successor trustee, whether or not appointed or confirmed by a court. See Arizona Laws 14-7401
B. A trustee shall allocate the following receipts from an entity to principal:
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 trust‘s interest in the entity.
3. Money received in total or partial liquidation of the entity.
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.
C. Money is received in partial liquidation either:
1. To the extent that the entity, at or near the time of a distribution, indicates that it is a distribution in partial liquidation.
2. If the total amount of money and property received in a distribution or series of related distributions is greater than twenty per cent of the entity’s gross assets, as shown by the entity’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, paragraph 2 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 entity that distributes the money.
E. A trustee may rely on 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 another 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.
F. For the purposes of this section, "entity" means any corporation, partnership, limited liability company, regulated investment company, real estate investment trust, common trust fund or other organization in which a trustee has an interest, other than a trust or estate to which section 14-7411 applies, a business or activity to which section 14-7412 applies or an asset-backed security to which section 14-7424 applies.