633.103  Certain corporate distributions.

In the absence of contrary provisions in the will or trust instrument, the following types of corporate distributions shall be treated as follows:

1.  Commencing with such distributions to shareholders of record on or after July 1, 1969, corporate distributions of shares of the distributing corporation, including distributions in the form of a share split or share dividend, are principal. A right to subscribe to shares or other securities issued by the distributing corporation accruing to shareholders on account of their share ownership and the proceeds of any sale of the right are principal.

2.  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 shares or cash or an option to purchase additional shares, are principal.

Section History: Early form

  [C71, 73, 75, 77, 79, 81, § 633.103]

Internal References

  Referred to in § 633.649

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