HERBERT R. O'CONOR, GOVERNOR. 1163

principal. All rights to subscribe to the shares or other se-
curities or obligations of a corporation accruing on account
of the ownership of shares or other securities in another cor-
poration, and the proceeds of any sale of such rights, shall
be deemed income.

(3) Where the assets of a corporation are liquidated,
amounts paid upon corporate shares as cash dividends declared
before such liquidation occurred or as arrears of preferred or
guaranteed dividends shall be deemed income; all other
amounts paid upon corporate shares on disbursement of the
corporate assets to the stockholders shall be deemed principal.
All disbursements of corporate assets to the stockholders,
whenever made, which are designated by the corporation as
a return of capital or division of corporate property shall be
deemed principal.

(4) Where a corporation succeeds another by merger, con-
solidation or reorganization or otherwise acquires its assets,
and the corporate shares of the succeeding corporation are
issued to the shareholders of the original corporation in like
proportion to, or in substitution for, their shares of the orig-
inal corporation, the two corporations shall be considered a
single corporation in applying the provisions of this section.
But two corporations shall not be considered a single corpora-
tion under this section merely because one owns corporate
shares of or otherwise controls or directs the other.

(5) In applying this section the date when a dividend
accrues to the person who is entitled to it shall be held to be
the date specified by the corporation as the one on which the
stockholders entitled thereto are determined, or in default
thereof the date of declaration of the dividend.

6. (Premium and Discount Bonds and Ground Rents. )
Where any part of the principal consists of bonds or other
obligations for the payment of money, or of ground rents, they
shall be deemed principal at their inventory value or in default
thereof at their market value at the time the principal was
established, or at their cost where purchased later, regardless
of their par or maturity or redemption value; and upon their
respective maturities or upon their sale or redemption any loss
or gain realized thereon shall fall upon or enure to the prin-
cipal.

7. (Expenses—Trust Estates. )

(1) All ordinary expenses incurred in connection with the
trust estate or with its administration and management, in-
cluding regularly recurring taxes assessed against any portion
of the principal, water rates, premiums on insurance taken
upon the estates of both tenant and remainderman, interest on