1997 Minnesota Statutes

     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