When a Fiduciary Distributes to a Beneficiary a Non-Cash Asset

question 120

Essay

When a fiduciary distributes to a beneficiary a non-cash asset, how is the realized gain or loss treated?

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Definitions:

Security Interest

A legal claim or lien on collateral that has been pledged, usually to secure repayment of a loan.

Guarantee

A written commitment whereby a guarantor agrees to pay a debt if the debtor does not.

Indemnity

A contractual obligation of one party to compensate for the loss or damage incurred by another party.

Personal Property Security Act

Legislation governing security interests in personal property, allowing creditors to register interests in a debtor's personal property as security for a debt.