2016 US Code
Title 26 - Internal Revenue Code
Subtitle A - Income Taxes
Chapter 1 - Normal Taxes and Surtaxes
Subchapter M - Regulated Investment Companies and Real Estate Investment Trusts
Part IV - Real Estate Mortgage Investment Conduits
Sec. 860C - Taxation of residual interests
| 26 U.S.C. § 860C (2016) |
| §860C. Taxation of residual interests |
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(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. 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. For purposes of this section— (1) Taxable incomeThe 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). 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). 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. 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. 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. 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. 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). 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. For special treatment of income in excess of daily accruals, see section 860E. |
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(Added Pub. L. 99–514, title VI, §671(a), Oct. 22, 1986, 100 Stat. 2309; amended Pub. L. 100–647, title I, §1006(t)(1), (8)(C), (21), Nov. 10, 1988, 102 Stat. 3419, 3421, 3426.) |
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AMENDMENTS
1988—Subsec. (b)(1). Pub. L. 100–647, §1006(t)(21), substituted "and, except as provided in regulations, in the same manner" for "and in the same manner" in introductory provisions. Subsec. (b)(1)(E). Pub. L. 100–647, §1006(t)(8)(C), added subpar. (E). Subsec. (e)(1). Pub. L. 100–647, §1006(t)(1), substituted "ordinary" for "ordinary income" in heading and amended text generally. Prior to amendment, text read as follows: "Any amount included in the gross income of any holder of a residual interest in a REMIC by reason of subsection (a) shall be treated as ordinary income." EFFECTIVE DATE OF 1988 AMENDMENTAmendment 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. |
| United States Code, 2012 Edition, Supplement 4, Title 26 - INTERNAL REVENUE CODE |
| Bills and Statutes |
| United States Code |
| Y 1.2/5: |
| Title 26 - INTERNAL REVENUE CODE Subtitle A - Income Taxes CHAPTER 1 - NORMAL TAXES AND SURTAXES Subchapter M - Regulated Investment Companies and Real Estate Investment Trusts PART IV - REAL ESTATE MORTGAGE INVESTMENT CONDUITS Sec. 860C - Taxation of residual interests |
| section 860C |
| 2016 |
| January 6, 2017 |
| No |
| standard |
| 100 Stat. 2309 102 Stat. 3419 |
| Public Law 99-514, Public Law 100-647 |
