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USC Title 26 enacted through 2008

§ 860C. Taxation of residual interests

 
(a)
Pass-thru of income or loss
 
(1)
In general
 
In determining the tax under this chapter of any holder of a residual interest in a REMIC, such holder shall take into account his daily portion of the taxable income or net loss of such REMIC for each day during the taxable year on which such holder held such interest.
 
(2)
Daily portion
 
The daily portion referred to in paragraph (1) shall be determined -
 
(A)
by allocating to each day in any calendar quarter its ratable portion of the taxable income (or net loss) for such quarter, and
 
(B)
by allocating the amount so allocated to any day among the holders (on such day) of residual interests in proportion to their respective holdings on such day.
 
(b)
Determination of taxable income or net loss
 
For purposes of this section -
 
(1)
Taxable income
 
The taxable income of a REMIC shall be determined under an accrual method of accounting and, except as provided in regulations, in the same manner as in the case of an individual, except that -
 
(A)
regular interests in such REMIC (if not otherwise debt instruments) shall be treated as indebtedness of such REMIC,
 
(B)
market discount on any market discount bond shall be included in gross income for the taxable years to which it is attributable as determined under the rules of section 1276(b)(2) (and sections 1276(a) and 1277 shall not apply),
 
(C)
there shall not be taken into account any item of income, gain, loss, or deduction allocable to a prohibited transaction,
 
(D)
the deductions referred to in section 703(a)(2) (other than any deduction under section 212) shall not be allowed, and
 
(E)
the amount of the net income from foreclosure property (if any) shall be reduced by the amount of the tax imposed by section 860G(c).
 
(2)
Net loss
 
The net loss of any REMIC is the excess of -
 
(A)
the deductions allowable in computing the taxable income of such REMIC, over
 
(B)
its gross income.
 
Such amount shall be determined with the modifications set forth in paragraph (1).
 
(c)
Distributions
 
Any distribution by a REMIC -
 
(1)
shall not be included in gross income to the extent it does not exceed the adjusted basis of the interest, and
 
(2)
to the extent it exceeds the adjusted basis of the interest, shall be treated as gain from the sale or exchange of such interest.
 
(d)
Basis rules
 
(1)
Increase in basis
 
The basis of any person's residual interest in a REMIC shall be increased by the amount of the taxable income of such REMIC taken into account under subsection (a) by such person with respect to such interest.
 
(2)
Decreases in basis
 
The basis of any person's residual interest in a REMIC shall be decreased (but not below zero) by the sum of the following amounts:
 
(A)
any distributions to such person with respect to such interest, and
 
(B)
any net loss of such REMIC taken into account under subsection (a) by such person with respect to such interest.
 
(e)
Special rules
 
(1)
Amounts treated as ordinary
 
Any amount taken into account under subsection (a) by any holder of a residual interest in a REMIC shall be treated as ordinary income or ordinary loss, as the case may be.
 
(2)
Limitation on losses
 
(A)
In general
 
The amount of the net loss of any REMIC taken into account by a holder under subsection (a) with respect to any calendar quarter shall not exceed the adjusted basis of such holder's residual interest in such REMIC as of the close of such calendar quarter (determined without regard to the adjustment under subsection (d)(2)(B) for such calendar quarter).
 
(B)
Indefinite carryforward
 
Any loss disallowed by reason of subparagraph (A) shall be treated as incurred by the REMIC in the succeeding calendar quarter with respect to such holder.
 
(3)
Cross reference
 
For special treatment of income in excess of daily accruals, see section 860E.








Tax Code (Internal Revenue Code) Section Index


U.S. GAAP by Codification Topic
 
105 GAAP Hierarchy
105 GAAP History

205 Presentation of Financial Statements
205-20 Discontinued Operations
210 Balance Sheet
210-20 Offsetting
220 Comprehensive Income
225 Income Statement
225-20 Extraordinary and Unusual Items
230 Statement of Cash Flows
250 Accounting Changes and Error Corrections
260 Earnings per Share
270 Interim Reporting

310 Impairment of a Loan
320 Investment Securities
320 Other-Than-Temporary Impairments, FSP FAS 115-2
320-10-05 Overview of Investments in Other Entities
320-10-35 Reclassification of Investments in Securities
323-10 Equity Method Investments
323-30 Investments in Partnerships and Joint Ventures
325-20 Cost Method Investments
330 Inventory

340-20 Capitalized Advertising Costs
350-20 Goodwill
350-30 Intangibles Other than Goodwill
350-40 Internal-Use Software
350-50 Website Development Costs
360 Property, Plant and Equipment
360-20 Real Estate Sales

410 Asset Retirement and Environmental Obligations
420 Exit or Disposal Cost Obligations
450 Contingencies
450-20 Loss Contingencies
450-30 Gain Contingencies
480 Redeemable Financial Instruments

505-20 Stock Dividends, Stock Splits
505-30 Treasury Stock

605 SEC Staff Accounting Bulletin, Topic 13
605-25 Revenue Recognition - Multiple Element Arrangements

715-30 Defined Benefit Plans - Pension
718 Share-Based Payment
730 Research and Development
730-20 Research and Development Arrangements

805 Business Combinations
810 Consolidation
810 Noncontrolling Interests
810 Consolidation of Variable Interest Entities, SFAS 167

815 Derivatives and Hedging Overview

820 Fair Value Measurements
820 Fair value when the markets are not active, FSP FAS 157-4
825 Fair Value Option

830 Foreign Currency Matters
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
835 Interest
835-20 Capitalization of Interest
835-30 Imputation of Interest

840 Leases
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions

855 Subsequent Events
860-20 Sale of Financial Assets, SFAS 166
860-50 Servicing Assets and Liabilities, SFAS 156

985-20 Costs of software to be sold


U.S. GAAP Codification
Accounting Topics
Tax Code (Internal Revenue Code) Section Index




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