26 U.S.C. § 860A — Taxation of REMIC’s

Page 2013 TITLE 26—INTERNAL REVENUE CODE § 860B see section 301(h) of Pub. L. 111–325, set out as a note under section 852 of this title. Pub. L. 111–325, title V, § 501(c), Dec. 22, 2010, 124 Stat. 3554, provided that: ‘‘The amendments made by this section [amending this section and repealing section 6697 of this title] shall apply to taxable years beginning after the date of the enactment of this Act [Dec. 22, 2010].’’ EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108–357 applicable to state- ments filed after Oct. 22, 2004, see section 243(g)(4)(E) of Pub. L. 108–357, set out as a note under section 856 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, see section 669 of Pub. L. 99–514, set out as a note under section 856 of this title. EFFECTIVE DATE Pub. L. 95–600, title III, § 362(e), Nov. 6, 1978, 92 Stat. 2852, as amended by Pub. L. 96–222, title I, § 103(a)(11)(A), Apr. 1, 1980, 94 Stat. 212; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘The amendments made by this section [enacting this section, amending sec- tions 316, 381, 852, 857, 6422, 6503, 6515, and 6697 of this title, repealing section 859 of this title, and redesig- nating prior section 860 as 859 of this title] shall apply with respect to determinations (as defined in section 860(e) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) after the date of the enactment of this Act [Nov. 6, 1978].’’ PART IV—REAL ESTATE MORTGAGE INVESTMENT CONDUITS Sec. 860A. Taxation of REMIC’s. 860B. Taxation of holders of regular interests. 860C. Taxation of residual interests. 860D. REMIC defined. 860E. Treatment of income in excess of daily accru- als on residual interests. 860F. Other rules. 860G. Other definitions and special rules. § 860A. Taxation of REMIC’s (a) General rule Except as otherwise provided in this part, a REMIC shall not be subject to taxation under this subtitle (and shall not be treated as a cor- poration, partnership, or trust for purposes of this subtitle). (b) Income taxable to holders The income of any REMIC shall be taxable to the holders of interests in such REMIC as pro- vided in this part. (Added Pub. L. 99–514, title VI, § 671(a), Oct. 22, 1986, 100 Stat. 2309; amended Pub. L. 100–647, title I, § 1006(t)(20), Nov. 10, 1988, 102 Stat. 3426.) Editorial Notes AMENDMENTS 1988—Subsec. (a). Pub. L. 100–647 substituted ‘‘this subtitle’’ for ‘‘this chapter’’ in two places. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE Pub. L. 99–514, title VI, § 675(a)–(c), Oct. 22, 1986, 100 Stat. 2320, as amended by Pub. L. 100–647, title I, § 1006(w)(1), Nov. 10, 1988, 102 Stat. 3427, provided that: ‘‘(a) GENERAL RULE.—Except as otherwise provided in this section, the amendments made by this subtitle [subtitle H (§§ 671–675) of title VI of Pub. L. 99–514, en- acting this part and amending sections 582, 593, 856, 1272, 6049, and 7701 of this title] shall take effect on Jan- uary 1, 1987. ‘‘(b) RULES FOR ACCRUING ORIGINAL ISSUE DISCOUNT.— The amendment made by section 672 [amending section 1272 of this title] shall apply to debt instruments issued after December 31, 1986, in taxable years ending after such date. ‘‘(c) TREATMENT OF TAXABLE MORTGAGE POOLS.— ‘‘(1) IN GENERAL.—The amendment made by section 673 [amending section 7701 of this title] shall take ef- fect on January 1, 1992. ‘‘(2) TREATMENT OF EXISTING ENTITIES.—The amend- ment made by section 673 shall not apply to any enti- ty in existence on December 31, 1991. The preceding sentence shall cease to apply with respect to any en- tity as of the 1st day after December 31, 1991, on which there is a substantial transfer of cash or other property to such entity. ‘‘(3) SPECIAL RULE FOR COORDINATION WITH WASH- SALE RULES.—Notwithstanding paragraphs (1) and (2), for purposes of applying section 860F(d) of the Inter- nal Revenue Code of 1986 (as added by this part [this subtitle]), the amendment made by section 673 shall apply to taxable years beginning after December 31, 1986.’’ STUDY OF AMENDMENTS BY PUB. L. 99–514 Pub. L. 99–514, title VI, § 675(d), as added by Pub. L. 100–647, title I, § 1006(w)(2), Nov. 10, 1988, 102 Stat. 3427, directed Secretary of the Treasury to conduct a study of the operation of the amendments made by this part [this subtitle] and their competitive impact on savings and loan institutions and similar financial institutions and, not later than Jan. 1, 1990, report to Congress, prior to repeal by Pub. L. 101–508, title XI, § 11832(5), Nov. 5, 1990, 104 Stat. 1388–559. § 860B. Taxation of holders of regular interests (a) General rule In determining the tax under this chapter of any holder of a regular interest in a REMIC, such interest (if not otherwise a debt instru- ment) shall be treated as a debt instrument. (b) Holders must use accrual method The amounts includible in gross income with respect to any regular interest in a REMIC shall be determined under the accrual method of ac- counting. (c) Portion of gain treated as ordinary income Gain on the disposition of a regular interest shall be treated as ordinary income to the ex- tent such gain does not exceed the excess (if any) of— (1) the amount which would have been in- cludible in the gross income of the taxpayer with respect to such interest if the yield on such interest were 110 percent of the applica- ble Federal rate (as defined in section 1274(d) without regard to paragraph (2) thereof) as of the beginning of the taxpayer’s holding period, over (2) the amount actually includible in gross income with respect to such interest by the taxpayer.