Section 503 – Transfer from income to principal for depreciation.

• (1) In this section, “depreciation” means a reduction in value due to wear, tear, decay, corrosion, or gradual obsolescence of a tangible asset having a useful life of more than one year.

• (2) A fiduciary may transfer to principal a reasonable amount of the net cash receipts from a principal asset that is subject to depreciation, but may not transfer any amount for depreciation:
  • (a) of the part of real property used or available for use by a beneficiary as a residence;
  • (b) of tangible personal property held or made available for the personal use or enjoyment of a beneficiary; or
  • (c) under this section, to the extent the fiduciary accounts:
    • (i) under Section 22-3-410 for the asset; or
    • (ii) under Section 22-3-403 for the business or other activity in which the asset is used.

• (3) An amount transferred to principal under this section need not be separately held.

Repealed and Re-enacted by Chapter 495, 2019 General Session