(401) Character of receipts
N.D. Cent. Code § 59-04.2-09
in effect59-04.2-09. (401) Character of receipts
1. 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 59-04.2-10 applies, a business or activity to which section 59-04.2-11
applies, or an asset-backed security to which section 59-04.2-23 applies.
2. Except as otherwise provided in this section, a trustee shall allocate to income money
received from an entity.
3. A trustee shall allocate the following receipts from an entity to principal:
a. Property other than money.
b. 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.
c. Money received in total or partial liquidation of the entity.
d. 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.
4. Money is received in partial liquidation:
a. To the extent that the entity, at or near the time of a distribution, indicates that it is
a distribution in partial liquidation; or
b. 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.
5. Money is not received in partial liquidation, nor may it be taken into account under
subdivision b of subsection 4, 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.
6. 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.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://ndlegis.gov/cencode/t59c04-2.pdf#nameddest=59-04p2-09Fetched: 10/16/2026