                                 CODE OF VIRGINIA

REIMBURSEMENT OF PRINCIPAL FROM INCOME (§ 64.2-1068)

A. If a fiduciary makes or expects to make a principal disbursement described in
subsection B, the fiduciary may transfer an appropriate amount from income to
principal in one or more accounting periods to reimburse principal or provide a
reserve for future principal disbursements.

B. To the extent a fiduciary has not been and does not expect to be reimbursed
by a third party, principal disbursements to which subsection A applies include:

   1. An amount chargeable to income but paid from principal because income is
   not sufficient;

   2. The cost of an improvement to principal, whether a change to an existing
   asset or the construction of a new asset, including a special assessment;

   3. A disbursement made to prepare property for rental, including tenant
   allowances, leasehold improvements, and commissions;

   4. A periodic payment on an obligation secured by a principal asset, to the
   extent the amount transferred from income to principal for depreciation is
   less than the periodic payment; and

   5. A disbursement described in subsection A of &#xA7; 64.2-1065.

C. If an asset whose ownership gives rise to a principal disbursement becomes
subject to a successive interest after an income interest ends, the fiduciary
may continue to make transfers under subsection A.

HISTORY: 2022, c. 354.