(760 ILCS 15/7)
(from Ch. 30, par. 507)
(a) Corporate distributions
of shares of the distributing corporation, including
distributions in the form of a stock split or stock dividend, are principal.
A right to subscribe to shares or other securities issued by the distributing
corporation accruing on account of the ownership of shares or other securities
in such corporation and the proceeds of any sale of the right are principal.
(b) Except to the extent that the corporation indicates that some part of a
corporate distribution is a settlement of preferred or guaranteed dividends
accrued since the trustee became a stockholder or is in lieu of an ordinary
cash dividend, a corporate distribution is principal if the distribution is pursuant to:
(1) a call of shares;
(2) a merger, consolidation or reorganization;
(3) a plan by which assets of the corporation are acquired by another
(4) a total or partial liquidation of the corporation, including
(a) any distribution which the corporation indicates is a distribution in total
or partial liquidation or (b) any distribution of assets, pursuant to the
judgment of a court or final administrative order by a government agency
ordering distribution of the particular assets.
(c) Distributions made from ordinary income by a regulated investment
company or by a trust qualifying and electing to be taxed under federal
law as a real estate investment trust are income. All other distributions
made by the company or trust, including distributions from capital gains,
depreciation or depletion, whether in the form of cash or an option to take
new stock or cash or an option to purchase additional shares, are principal.
(d) Except as provided in subsections (a), (b) and (c), all corporate
distributions are income, including cash dividends, distributions of or
rights to subscribe to shares or securities or obligations of corporations
other than the distributing corporation, and the proceeds of the rights
or property distributions. Except as provided in subsections
(b) and (c), if the distributing corporation gives
a stockholder an option to receive a distribution either in cash or in its
own shares, the distribution chosen is income.
(e) The trustee may rely upon any statement of the distributing corporation
as to any fact relevant under any provision of this Act concerning the source
or character of dividends or distributions of corporate assets.
(Source: P.A. 84-545.)