WILLIAM DONALD SCHAEFER, Governor Ch. 705

(3) A total or partial liquidation of the
corporation, including any distribution which the corporation
indicates is a distribution in total or partial liquidation or
any distribution of assets, other than cash, pursuant to a court
decree or final administrative order by a government agency
ordering distribution of the particular assets.

(c)  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
stock or cash or an option to purchase additional shares, are
principal; EXCEPT THAT DISTRIBUTIONS PER SHARE, MADE IN ANY
CALENDAR YEAR, BY A REGULATED INVESTMENT COMPANY FROM REALIZED
CAPITAL GAINS ARE INCOME TO THE EXTENT REQUIRED IN ORDER FOR THE
SUM OF THE DISTRIBUTIONS PER SHARE FROM ORDINARY INCOME AND FROM
REALIZED CAPITAL GAINS TO EQUAL AN AMOUNT DETERMINED BY
MULTIPLYING THE NET ASSET VALUE OF A SHARE OF THE REGULATED
INVESTMENT COMPANY ON JANUARY 1 OF SUCH CALENDAR YEAR (OR ON SUCH
LATER DATE OF ACQUISITION BY A TRUSTEE DURING SUCH CALENDAR YEAR)
BY THE ANNUAL FEDERAL MID-TERM RATE APPLICABLE TO JANUARY 1 OF
SUCH CALENDAR YEAR (OR TO SUCH LATER DATE OF ACQUISITION)
ESTABLISHED BY THE SECRETARY OF THE TREASURY UNDER § 1274(1) OF
THE INTERNAL REVENUE CODE OF 1986, ADJUSTED TO REFLECT THE
PROPORTION OF THE CALENDAR YEAR IN WHICH THE SHARE HAS BEEN HELD
BY A TRUSTEE, PROVIDED THAT THE TRUSTEE MAKES AN IRREVOCABLE
WRITTEN ELECTION TO SO TREAT SUCH DISTRIBUTIONS ON THE FIRST
YEAR-END ACCOUNTING OF THE TRUST'S PRINCIPAL AND INCOME STATED
(1) AFTER JUNE 30, 1989, IF SUCH SHARE IS OWNED ON JUNE 30, 1989,
OR (2) AFTER SUCH SHARE IS ACQUIRED, IF SUCH SHARE IS ACQUIRED ON
OR AFTER JULY 1, 1989.

(d)  Except as provided in subsections (a), (b), and (c),
all corporate distributions are income, including cash dividends,
distributions of or rights to subscribe to shares or securities
or obligations of corporations other than the distributing
corporation, and the proceeds of the rights or property
distributions. Except as provided in subsections (b) and (c), if
the distributing corporation gives a stockholder an option to
receive a distribution either in cash or in its own shares, the
distribution chosen is income.

(e)  The trustee may rely upon any statement of the
distributing corporation as to any fact relevant under any
provision of this subtitle concerning the source or character of
dividends or distributions of corporate assets.

SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall
take effect July 1, 1989.

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