The Florida Senate

738.401  Character of receipts.--

(1)  For purposes of 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 s. 738.402 applies, a business or activity to which s. 738.403 applies, or an asset-backed security to which s. 738.608 applies.

(2)  Except as otherwise provided in this section, a trustee shall allocate to income money received from an entity.

(3)  A trustee shall allocate the following receipts from an entity to principal:

(a)  Property other than money.

(b)  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.

(c)  Money received in total or partial liquidation of the entity.

(d)  Money received from an entity that is a regulated investment company or a real estate investment trust if the money distributed represents short-term or long-term capital gain realized within the entity.

(4)  If a trustee elects, or continues an election made by its predecessor, to reinvest dividends in shares of stock of a distributing corporation or fund, whether evidenced by new certificates or entries on the books of the distributing entity, the new shares shall retain their character as income.

(5)  Money is received in partial liquidation:

(a)  To the extent the entity, at or near the time of a distribution, indicates that such money is a distribution in partial liquidation; or

(b)  If the total amount of money and property received in a distribution or series of related distributions is greater than 20 percent of the entity's gross assets, as shown by the entity's year-end financial statements immediately preceding the initial receipt.

(6)  Money is not received in partial liquidation, nor may money be taken into account under paragraph (5)(b), to the extent such money does not exceed the amount of income tax a trustee or beneficiary must pay on taxable income of the entity that distributes the money.

(7)  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.

History.--s. 1, ch. 2002-42; s. 4, ch. 2003-43.