Basic Uniform Commercial Code

Lowest Intermediate Balance Test

The lowest intermediate balance test identifies proceeds out of commingled funds. It comprises three assumptions:

  • Funds withdrawn from a commingled account will first deplete nonproceeds.
  • Proceeds are deemed to be withdrawn only if no nonproceeds remain in the account.
  • Subsequent deposits of nonproceeds do not replenish proceeds.

I.e., the proceeds remaining in a commingled account are the lowest the account got after getting those proceeds.