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PARRIS N. GLENDENING, Governor
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Ch. 292
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15-509 OF THIS SUBTITLE APPLIES, A BUSINESS OR ACTIVITY TO WHICH § 15-510 OF
THIS SUBTITLE APPLIES, OR AN ASSET-BACKED SECURITY TO WHICH § 15-522 OF
THIS SUBTITLE APPLIES.
(B) EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION, A TRUSTEE SHALL
ALLOCATE TO INCOME MONEY RECEIVED FROM AN ENTITY.
(C) EXCEPT AS PROVIDED IN SUBSECTION (F) OF THIS SECTION, 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) OF 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.
(E) MONEY IS NOT RECEIVED IN PARTIAL LIQUIDATION, NOR MAY IT BE
TAKEN INTO ACCOUNT UNDER SUBSECTION (D)(2) OF THIS SECTION, 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) (1) (I) IN THIS SUBSECTION THE FOLLOWING WORDS HAVE THE
MEANINGS INDICATED.
(II) "INVESTMENT FUND" MEANS AN ENTITY THAT IS EXEMPT
FROM REGISTRATION UNDER THE INVESTMENT COMPANY ACT OF 1940 BASED ON
THE AUTHORITY IN 15 U.S.C. $ 80A-3(C)(1), IS TREATED AS A PARTNERSHIP FOR
FEDERAL INCOME TAX PURPOSES, HAS 50 OR MORE INVESTORS, AND MORE THAN
HALF THE ASSETS OF WHICH CONSIST OF CASH AND MARKETABLE SECURITIES,
INCLUDING ITS PROPORTIONATE SHARE OF THESE ASSETS OWNED BY ANY ENTITY
IN WHICH IT OWNS AN INTEREST.
(III) "UNIT" MEANS AN EQUITY INTEREST IN AN INVESTMENT FUND.
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- 1709 -
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