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36 Temp. L.Q. 121 (1962-1963)
Accounting Considerations of Apportionment by Trustees of Receipts from Stock

handle is hein.journals/temple36 and id is 123 raw text is: TEMPLE LAW QUARTERLY © 1963 TEMPLE UNIVERSITY VOL. 36 NO. 2 WINTER 1963 ACCOUNTING CONSIDERATIONS OF APPORTIONMENT BY TRUSTEES OF RECEIPTS FROM STOCK DONALD S. COHAN t I. INTRODUCTION This article considers the accounting aspects of common-law ap- portionments between principal and income of trustees' receipts from trust ownership of securities.' Despite the fact that the Pennsylvania Supreme Court recently decided in the Catherwood case' that the common law of apportion- ments would no longer apply in many situations, the subject is still a vital one. The full impact of the Catherwood case has not been divined as yet and the cut-off date is vague.' Further, there are key jurisdic- tions still applying non-statutory rules of apportionment,4 and settlors may still require the application of these rules. t A.B., Amherst College; LL.B., Harvard University. Member, Philadelphia Bar. Partner, Korn and Cohan. 1. For a general discussion of the subject of aspects of apportionment see: Brigham, Pennsylvania Rules Governing the Allocation of Receipts Derived by Trustees from Shares of Stock, 85 U. PA.' L. Rxv. 358 (1937); Cohan and Dean, Legal, Tax and Accounting Aspects of Fiduciary Apportionment of Stock Proceeds: Non-Statutory Pennsylvania Rules, 106 U. PA. L. REV. 157 (1957); Damrau, Ap- portionment of Stock Dividends in Trust Created Prior to 1945, 15 U. PIrr. L. REv. 34 (1953) ; Faught, Statutory Solution of the Problem of Allocation Between Life Tenant and Remainderman, 11 TEMP. L.Q. 139 (1937); Nemmers, Key Problems in the Apportionment of Increase Between Successive Interests in Personalty, 41 MIcH. L. REv. 815 (1943); Grossman, Mechanics of Apportionment of Receipts from Shares of Stock, 65 DIcK. L. REv. 179 (1961) presents various apportionment calculations; 3 ScoTT, TRUSTS § 236 (2d ed. 1956); RESTATEMENT (SECOND), TRUSTS § 236 (1959). 2. 405 Pa. 61, 173 A.2d 86 (1961). 3. A number of cases have arisen since the Catherwood decision asking the court to clarify the meaning of its dictum that overruled the long line of Pennsylvania cases holding that a retroactive application of the Principal and Income Act of 1947 is unconstitutional, see, e.g., Brown Estate, 408 Pa. 220, 183 A.2d 307 (1962); Pew Trust, (No. 2) 12 Fiduc. Rep. 275 (Pa. 1962); Keasbey Trust, 12 Fiduc. Rep. 145 (Pa. 1962); Curtis Trust, 12 Fiduc. Rep. 205 (Pa. 1962); Reed Trust, 12 Fiduc. Rep. 144 (Pa. 1962); Hessenbruch Estate, 26 Pa. D. & C. 64 (1961); Heyl Trust, 12 Fiduc. Rep. 9 (Pa. 1962) ; and Semple Trust, 12 Fiduc. Rep. 6 (Pa. 1962). These last three cases hold that pre-1945 apportionable events are still controlled by the common law rule. 4. New York, New Jersey and Maryland are examples of such jurisdictions. See 44 A.L.R.2d 1277, 1287-1292 (1955). (121)

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