New Mexico § 46-3A-401 - Character of receipts

§ 46-3A-401. Character of receipts

(a) As used in 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 Section 402

applies, a business or activity to which Section 403 applies or an asset-backed security

to which Section 415 applies. (b) Except as otherwise provided in this section, a trustee shall allocate to income

money received from an entity. (c) 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; and (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. (d) Money is received in partial liquidation: (1) to the extent that the entity, at or near the time of a distribution, indicates

that it is a distribution in partial liquidation; or (2) if the total amount of money and property received in a distribution or series

of related distributions is greater than twenty percent of the entity's gross assets,

as shown by the entity's year-end financial statements immediately preceding the initial

receipt. (e) Money is not received in partial liquidation, nor may it be taken into account

under Subsection (d)(2), 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. (f) 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.