Iowa Code 637.503 – Transfers from income to principal for depreciation
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1. For purposes of this section, “depreciation” means a reduction in value of a fixed asset having a useful life of more than one year due to wear, tear, decay, corrosion, or gradual obsolescence.
Terms Used In Iowa Code 637.503
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Beneficiary: includes , in the case of a decedent's estate, an heir, legatee, and devisee, and, in the case of a trust, an income beneficiary and a remainder beneficiary. See Iowa Code 637.102
- Decedent: A deceased person.
- following: when used by way of reference to a chapter or other part of a statute mean the next preceding or next following chapter or other part. See Iowa Code 4.1
- Principal: means property held in trust for distribution to a remainder beneficiary when the trust terminates. See Iowa Code 637.102
- Trustee: A person or institution holding and administering property in trust.
- Trustee: includes an original, additional, or successor trustee, whether or not appointed or confirmed by a court. See Iowa Code 637.102
- year: means twelve consecutive months. See Iowa Code 4.1
2. A trustee may transfer to principal a reasonable amount of the net cash receipts from a principal asset that is subject to depreciation, but a transfer shall not be made for depreciation under any of the following circumstances:
a. When the depreciation involves the portion of real property used or available for use by a beneficiary as a residence, or tangible personal property held or made available for the personal use or enjoyment of a beneficiary.
b. When the depreciation occurs during the administration of a decedent‘s estate.
c. If the trustee is accounting under section 637.403 for the business or activity in which the asset is used.
3. An amount transferred to principal need not be held as a separate fund.