1444                            LAWS OF MARYLAND                      [CH. 877

(2)    in the absence of any contrary terms of the trust instrument,
in accordance with the provisions of this Article; or

(3)    if neither of the preceding rules of administration is ap-
plicable, in accordance with what is reasonable and equitable in view
of the interests of those entitled to income as well as of those entitled
to principal, and in view of the manner in which men of ordinary
prudence, discretion and judgment would act in the management of
their own affairs.

(b) If the trust instrument gives the trustee discretion in credit-
ing a receipt or charging an expenditure to income or principal or
partly to each, no inference of imprudence or partiality arises from
the fact that the trustee has made an allocation contrary to a pro-
vision of this Article.

(a)    Income is the return in money or property derived from the
use of principal, including return received as:

(1)    rent of real or personal property, including ground rents as
well as sums received for cancellation or renewal of a lease;

(2)    interest on money lent, including sums received as considera-
tion for the privilege of prepayment of principal except as provided
in §7;

(3) income earned during administration of a decedent's estate
as provided in §5;

(4) corporate distributions as provided in §6;

(5)    accrued increment on bonds or other obligations issued at
discount as provided in §7;

(6)    receipts from business and farming operations as provided
in §8;

(7)    receipts from disposition of natural resources as provided
in §9;

(8)    receipts from other principal subject to depletion as provided
in §10;

(9)    amounts representing that portion of dividends, interest,
rents or other income payable to the trustee which, for income tax
purposes, is required by any law of the United States, or of any
State thereof or other governmental unit, to be withheld by the person
paying the same; and the amount so withheld shall be deemed to have
been collected by the trustee and paid to the person entitled to the
benefit of the tax so withheld.

(b)    Principal is the property which has been set aside by the
owner or the person legally empowered so that it is held in trust
eventually to be delivered to a remainderman while the return or use
of the principal is in the meantime taken or received by or held for
accumulation for an income beneficiary. Principal includes:

(1) consideration received by the trustee on the sale or other
transfer of principal or on repayment of a loan or as a refund or
replacement or change in the form of principal;