Iowa Code 637.504 – Transfers from income to reimburse principal
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Terms Used In Iowa Code 637.504
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- property: includes personal and real property. See Iowa Code 4.1
- Trustee: A person or institution holding and administering property in trust.
637.504 Transfers from income to reimburse principal.
1. If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.
2. Principal disbursements to which subsection 1 applies include all of the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a third party:
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 an existing asset or the construction of a new asset, including special assessments.
c. Disbursements made to prepare property for rental, including leasehold improvements and broker’s commissions.
d. Periodic payments on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments.
e. Disbursements described in § 637.502, subsection 1, paragraph “”g””.
3. If the asset whose ownership gives rise to the disbursements becomes subject to a
successive income interest after an income interest ends, a trustee may continue to transfer
amounts from income to principal as provided in subsection 1.
99 Acts, ch 124, §27
1. If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.
2. Principal disbursements to which subsection 1 applies include all of the following, but only to the extent that the trustee has not been and does not expect to be reimbursed by a third party:
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 an existing asset or the construction of a new asset, including special assessments.
c. Disbursements made to prepare property for rental, including leasehold improvements and broker’s commissions.
d. Periodic payments on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments.
e. Disbursements described in § 637.502, subsection 1, paragraph “”g””.
3. If the asset whose ownership gives rise to the disbursements becomes subject to a
successive income interest after an income interest ends, a trustee may continue to transfer
amounts from income to principal as provided in subsection 1.
99 Acts, ch 124, §27