55-277.24 - Asset-backed securities.
§ 55-277.24. Asset-backed securities.
A. In this section, "asset-backed security" means an asset whose value isbased upon the right it gives the owner to receive distributions from theproceeds of financial assets that provide collateral for the security. Theterm includes an asset that gives the owner the right to receive from thecollateral financial assets only the interest or other current return or onlythe proceeds other than interest or current return. The term does not includean asset to which § 55-277.10 or § 55-277.18 applies.
B. If a trust receives a payment from interest or other current return andfrom other proceeds of the collateral financial assets, the trustee shallallocate to income the portion of the payment which the payer identifies asbeing from interest or other current return and shall allocate the balance ofthe payment to principal.
C. If a trust receives one or more payments in exchange for the trust'sentire interest in an asset-backed security in one accounting period, thetrustee shall allocate the payments to principal. If a payment is one of aseries of payments that will result in the liquidation of the trust'sinterest in the security over more than one accounting period, the trusteeshall allocate ten percent of the payment to income and the balance toprincipal.
(1999, c. 975.)