(a)(1) In 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 financial assets that provide collateral for the
(2) “Asset-backed security” includes an asset that gives the owner the right to receive from the collateral
financial assets only the interest or other current return or only the proceeds other
than interest or current return.
(3) “Asset-backed security” does not include an asset to which § 15-508 or § 15-516 of this subtitle applies.
(b) If a trust receives a payment from interest or other current return and from other
proceeds of the collateral financial assets, the trustee shall allocate to income
the portion of the payment which the payer identifies as being from interest or other
current return and shall allocate the balance of the payment to principal.
(c)(1) 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 to principal.
(2) If a payment is one of a series of payments that will result in the liquidation
of the trust's interest in the security over more than one accounting period, the
trustee shall allocate 10% of the payment to income and the balance to principal.
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