501B.70 Underproductive property.
Subdivision 1. Portion of proceeds as income. Except as otherwise provided in this section, a portion of the net proceeds of a sale of a part of the principal that has not produced an average net income of at least one percent per year of its inventory value for more than a year, including as income the value of any beneficial use of the property by the income beneficiary, must be treated as delayed income to which the income beneficiary is entitled as provided in this section. The net proceeds of sale are the gross proceeds received, including the value of property received in substitution for the property disposed of, less the expenses, including capital gains tax, if any, incurred in the disposition and less any carrying charges paid while the property was underproductive.
Subd. 2. Calculation of delayed income. The sum allocated as delayed income is the difference between the net proceeds and the amount that would have produced the net proceeds, had it been invested at simple interest at four percent per year while the property was underproductive. This sum, plus any carrying charges and expenses previously charged against income while the property was underproductive, less any income received by the income beneficiary from the property and less the value of any beneficial use of the property by the income beneficiary, is income, and the balance is principal.
Subd. 3. Accrual of delayed income. An income beneficiary or the income beneficiary's estate is entitled to delayed income under this section as if accrued from day to day.
Subd. 4. Difficult-to-apportion property. If principal subject to this section is disposed of by conversion into property that cannot be apportioned easily, including, but not limited to, land, mortgages, or realty acquired by or in lieu of foreclosure, the income beneficiary is entitled to the net income from any property or obligation into which the original principal is converted while the substituted property or obligation is held. If within five years after the conversion the substituted property has not been further converted into easily apportionable property, no allocation as provided in this section may be made.
HIST: 1989 c 340 art 1 s 59