S.C. Code Ann. § 62-7-428
Future principal disbursements reserves
Published Jan 1, 2003
- (A) If a trustee makes or expects to make a principal disbursement described in this section, the trustee may transfer an appropriate amount from income to principal in one or more accounting periods to reimburse principal or to provide a reserve for future principal disbursements.
(B) A principal disbursement for purposes of this section includes the following, but only to the extent that the trustee has not been, and does not expect to be, reimbursed by a third party:
- (1) an amount chargeable to income but paid from principal because it is unusually large, including extraordinary repairs;
- (2) a capital improvement to a principal asset, whether in the form of changes to an existing asset or the construction of a new asset, including special assessments;
- (3) a disbursement made to prepare property for rental, including tenant allowances, leasehold improvements, and broker's commissions;
- (4) a periodic payment on an obligation secured by a principal asset to the extent that the amount transferred from income to principal for depreciation is less than the periodic payments; and
- (5) a disbursement described in Section 62-7-426(A)(7).
- (C) If the asset whose ownership gives rise to the disbursements becomes subject to a successive income interest after an income interest ends, a trustee may continue to transfer amounts from income to principal as provided in subsection (A).