637.427 Asset-backed securities. 1. For purposes of this section, 'asset-backed security' means an asset whose value is based upon the right it gives the owner to receive distributions from the proceeds of financialassets that provide collateral for the security. The term includes an asset that gives the ownerthe right to receive only the interest or other current return from the collateral financial assetsor only the proceeds from the capital investment in the collateral financial assets. It does notinclude an asset to which section 637.401 or 637.421 applies. 2. If a trust receives a payment from the interest or other current return and the capital investment of the collateral financial assets, the trustee shall allocate to income the portionof a payment that the payor identifies as being from the interest or other current return, andshall allocate the balance of the payment to principal. 3. If a trust receives one or more payments in exchange for the trust’s entire interest in an asset-backed security in one accounting period, the trustee shall allocate the payments toprincipal. If a payment is one of a series of payments that will result in the liquidation of thetrust’s n an asset-backed security in one accounting period, the trustee shall allocate the payments toprincipal. If a payment is one of a series of payments that will result in the liquidation of thetrust’s interest in the security over more than one accounting period, the trustee shall allocateten percent of the payment to income and the balance to principal. 99 Acts, ch 124, §23Referred to in §637.412, 637.420 Sat Dec 23 12:19:18 2023 Iowa Code 2024, Section 637.427 (16, 0)
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