Reimbursement of principal from income.

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  • (1) If a fiduciary makes or expects to make a principal disbursement described in Subsection (2), the fiduciary may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or provide a reserve for future principal disbursements.
  • (2) To the extent that a fiduciary has not been and does not expect to be reimbursed by a third party, principal disbursements to which Subsection (1) applies include:
    • (a) an amount chargeable to income but paid from principal because income is not sufficient;
    • (b) the cost of an improvement to principal, regardless of whether the improvement is a change to an existing asset or the construction of a new asset, including a special assessment;
    • (c) a disbursement made to prepare property for rental, including tenant allowances, leasehold improvements, and commissions;
    • (d) a periodic payment 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 payment; and
    • (e) a disbursement described in Subsection 22-3-502(1).
  • (3) If an asset whose ownership gives rise to a principal disbursement becomes subject to a successive interest after an income interest ends, the fiduciary may continue to make transfers under Subsection (1).




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