§ 81.108. Subaccounting and Recordkeeping.

 (a)  Subaccounting refers to a process whereby the lawyer or the lawyer’s Eligible Institution segregates Nonqualified Funds by Third Party Owner, and income on each subaccount is separately calculated, reported, and paid to the Third Party Owner. Subaccounting attributes all of the income earned on the Rule 1.15 Funds while in a Trust Account to the Third Party Owner.

     (i)   Nothing in these regulations shall be construed to prohibit a lawyer from maintaining and administering a separate subaccount for each Third Party Owner from whom Rule 1.15 Funds are received.

     (ii)   A lawyer who directly maintains a subaccounting system for Rule 1.15 Funds must comply not only with Pa.R.P.C. regarding such funds, but must also comply with applicable laws and regulations of the United States and of the Internal Revenue Service in particular.

     (iii)   Nothing in these regulations shall be construed to prohibit a lawyer from delegating to an Eligible Institution the responsibility for maintaining and administering a separate subaccount for each Third Party Owner from whom the lawyer receives Rule 1.15 Funds.



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